Question

Arlington LLC purchased an automobile for $55,000 on July 5, 2019. What is Arlington's depreciation deduction for 2019 if its business-use percentage is 75 percent? (Ignore any possible bonus depreciation. ) (Use Exhibit 10-10. )


A. $8,250. B. $5,500. C. $7,500. D. $4,250. E. None of the choices are correct

Answer 1

The depreciation deduction for 2019 to Arlington LLC, given the business - use percentage is C. $7, 500

How to find the depreciation deduction?

Tax laws are such that when a fixed asset such as an automobile has a  MACRS value for the year that is more than $10, 000, the business - use percentage would be found by the formula:

= 10 % x business - use percentage

The MACRS for an automobile in the first year is $11, 000 so the depreciation deduction would be:

= 10, 000 x 75%

= $7, 500

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