Required information [The following information applies to the questions displayed below.] Lina purchased a new car for use in her business during 2021. The auto was the only business asset she purchased during the year, and her business was extremely profitable. Calculate her maximum depreciation deductions (including $179 expense unless stated otherwise) for the automobile in 2021 and 2022 (Lina doesn't want to take bonus depreciation for 2021 or 2022) in the following alternative scenarios (assuming half-year convention for all): (Use MACRS Table 1, Table 2, and Exhibit 10-10.) d. The vehicle cost $80,000, and she used it 80 percent for business. She sold it on March 1 of year 2. Depreciation deduction Year 2021 2022 e. The vehicle cost $71,000, and she used it 20 percent for business. Year Depreciation deduction 2021 2022 f. The vehicle cost $71,000, and it is an SUV that weighs 6,500 pounds. Business use was 100 percent. Year Depreciation deduction 2021 2022 Table 1 MACRS Half-Year Convention 20-Year Depreciation Rate for Recovery Period 3-Year 5-Year 7-Year 10-Year 15-Year 33.33% 20.00% 14.29% 10.00% 5.00% 44.45 32.00 24.49 18.00 9.50 3.750% Year 1 Year 2 Year 3 7.219 EXHIBIT 10-10 Automobile Depreciation Limits 14.81 19.20 17.49 14.40 8.55 6.677 TABLE 2a MACRS Mid-Quarter Convention: For property placed in service during the first quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 35.00% 25.00% Year 2 26.00 21.43 Year 3 15.60 15.31 Year 4 11.01 10.93 Year 5 11.01 8.75 Year 6 1.38 8.74 Year 7 8.75 Year 8 Year 4 7.41 11.52 12.49 11.52 7.70 6.177 11.52 8.93 9.22 6.93 5.713 5.76 7.37 6.23 5.285 8.92 8.93 Recovery Year 1 2 3 4 and after 2021* 10.100** 16.100 9,700 5,760 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year Placed in Service 2020 2019 10,100** 10.100** 16,100 16,100 9,700 9,700 5,760 5,760 2018 10,000** 16,000 9,600 5,760 6.55 5.90 4.888 4.46 6.55 4.522 5.90 5.91 1.09 4.462 6.56 6.55 *As of press date, the IRS had not released the 2021 limitations for automobiles, so throughout the chapter we use the same limitations as in 2020 for 2021. 4.461 TABLE 26 MACRS Mid-Quarter Convention: For property placed in service during the second quarter 5.90 5.91 3.28 4.462 **$8,000 additional depreciation is allowed when bonus depreciation is claimed (5168(k) (2) (F)]. Year 12 5.90 4.461 Year 13 5.91 4.462 5.90 4.461 Year 14 Year 15 Year 16 Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 25.00% 17.85% Year 2 30.00 23.47 Year 3 18.00 16.76 Year 4 11.37 Year 5 11.37 8.87 Year 6 4.26 8.87 5.91 2.95 4.462 4.461 11.97 Year 17 4.462 4.461 Year 18 4.462 8.87 Year 19 Year 20 Year 7 Year 8 4.461 3.34 Year 21 2.231 TABLE 2c MACRS Mid-Quarter Convention: For property placed in service during the third quarter TABLE 20 MACRS-Mid Quarter Convention: For property placed in service during the fourth quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 15.00% 10.71% Year 2 34.00 25.51 Year 3 20.40 18.22 Year 4 12.24 13.02 alm Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 5.00% 3.57% Year 2 38.00 27.55 Year 3 22.80 19.68 Year 4 13.68 14.06 Year 5 10.94 10.04 Year 6 8.73 Year 7 8.73 11.30 9.30 Year 5 Year 6 7.06 8.85 9.58 8.86 Year 7 Year 8 5.53 Year 8 7.64 Required information [The following information applies to the questions displayed below.] Lina purchased a new car for use in her business during 2021. The auto was the only business asset she purchased during the year, and her business was extremely profitable. Calculate her maximum depreciation deductions (including $179 expense unless stated otherwise) for the automobile in 2021 and 2022 (Lina doesn't want to take bonus depreciation for 2021 or 2022) in the following alternative scenarios (assuming half-year convention for all): (Use MACRS Table 1, Table 2, and Exhibit 10-10.) d. The vehicle cost $80,000, and she used it 80 percent for business. She sold it on March 1 of year 2. Depreciation deduction Year 2021 2022 e. The vehicle cost $71,000, and she used it 20 percent for business. Year Depreciation deduction 2021 2022 f. The vehicle cost $71,000, and it is an SUV that weighs 6,500 pounds. Business use was 100 percent. Year Depreciation deduction 2021 2022 Table 1 MACRS Half-Year Convention 20-Year Depreciation Rate for Recovery Period 3-Year 5-Year 7-Year 10-Year 15-Year 33.33% 20.00% 14.29% 10.00% 5.00% 44.45 32.00 24.49 18.00 9.50 3.750% Year 1 Year 2 Year 3 7.219 EXHIBIT 10-10 Automobile Depreciation Limits 14.81 19.20 17.49 14.40 8.55 6.677 TABLE 2a MACRS Mid-Quarter Convention: For property placed in service during the first quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 35.00% 25.00% Year 2 26.00 21.43 Year 3 15.60 15.31 Year 4 11.01 10.93 Year 5 11.01 8.75 Year 6 1.38 8.74 Year 7 8.75 Year 8 Year 4 7.41 11.52 12.49 11.52 7.70 6.177 11.52 8.93 9.22 6.93 5.713 5.76 7.37 6.23 5.285 8.92 8.93 Recovery Year 1 2 3 4 and after 2021* 10.100** 16.100 9,700 5,760 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year Placed in Service 2020 2019 10,100** 10.100** 16,100 16,100 9,700 9,700 5,760 5,760 2018 10,000** 16,000 9,600 5,760 6.55 5.90 4.888 4.46 6.55 4.522 5.90 5.91 1.09 4.462 6.56 6.55 *As of press date, the IRS had not released the 2021 limitations for automobiles, so throughout the chapter we use the same limitations as in 2020 for 2021. 4.461 TABLE 26 MACRS Mid-Quarter Convention: For property placed in service during the second quarter 5.90 5.91 3.28 4.462 **$8,000 additional depreciation is allowed when bonus depreciation is claimed (5168(k) (2) (F)]. Year 12 5.90 4.461 Year 13 5.91 4.462 5.90 4.461 Year 14 Year 15 Year 16 Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 25.00% 17.85% Year 2 30.00 23.47 Year 3 18.00 16.76 Year 4 11.37 Year 5 11.37 8.87 Year 6 4.26 8.87 5.91 2.95 4.462 4.461 11.97 Year 17 4.462 4.461 Year 18 4.462 8.87 Year 19 Year 20 Year 7 Year 8 4.461 3.34 Year 21 2.231 TABLE 2c MACRS Mid-Quarter Convention: For property placed in service during the third quarter TABLE 20 MACRS-Mid Quarter Convention: For property placed in service during the fourth quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 15.00% 10.71% Year 2 34.00 25.51 Year 3 20.40 18.22 Year 4 12.24 13.02 alm Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 5.00% 3.57% Year 2 38.00 27.55 Year 3 22.80 19.68 Year 4 13.68 14.06 Year 5 10.94 10.04 Year 6 8.73 Year 7 8.73 11.30 9.30 Year 5 Year 6 7.06 8.85 9.58 8.86 Year 7 Year 8 5.53 Year 8 7.64