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On October 15, 2019, Jon purchased and placed in service a used car. The purchase price was $38,000. This was the only business use asset Jon acquired in 2019. He used the car 80% of the time for business and 20% for personal use. Jon used the regular MACRS method. Calculate the total cost recovery deduction Jon may take for 2019 with respect to the car.

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  1. 20 July, 04:53
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    cost recovery deduction = $1520

    Step-by-step explanation:

    given data

    purchase price = $38,000

    used the car business = 80%

    used the car personal = 20%

    solution

    cost recovery limit are

    cost recovery limit = asset value * statutory % * mid quater convention ... 1

    we know car which have 5 year MACRS convention and as per MACRS depreciated 20 % in 1st year

    and here this car is use so no 1st year depreciation

    so we use MACRS statutory % method

    cost recovery limit = $38000 * 5%

    cost recovery limit = $1900

    we know maximum limit is $3160

    so cost of recovery is $1900

    so

    cost recovery deduction is

    cost recovery deduction = cost recovery limit - personal use

    cost recovery deduction = $1900 - ($1900 * 20%)

    cost recovery deduction = $1520
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