On October 15, 2018, Jon purchased and placed in service a used car. The purchase price was $25,000. This was the only business use asset Jon acquired in 2018. 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 2018 with respect to the car.

The total cost recovery deduction Jon may take for 2018 with respect to the car is $1000

Explanation:

As per MACRS (modified accelerated cost recovery system), cars are in the automobiles category which has 5-years convention.

Hence, car will be depreciated at 20% in the first year. But in the case of used cars first depreciation is not applicable

In this case, MACRS statutory percentage is used as follows:

1. Cost Recovery Limit= Asset value * Statutory Percentage * Mid-quarter conversion

=25000*5%

=$1,250 (maximum limit= $3,160)

The Cost recovery is $1,250

2. Cost recovery limit= Cost recovery limit - Personal use

=1250 - (1250*20%)

=1250-(250)

=$1000

Hence, the total deduction for Jon is $1,000

The used car is not eligible for additional first year depreciation

Annual limit on cost recovery for automobile for the year is limited to $3,160.

answer; (c) penalty

answer; ///(d) stand out from all of the others;