Calculate william maximum depreciation deduction

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Problem - Modified Accelerated Cost Recovery System (MACRS), Election to Expense, Listed Property, Limitation on Depreciation of Luxury Automobiles

During 2016, William purchases the following capital assets for use in his catering business:

New passenger automobile (September 30) - $21,500

Baking equipment (June 30) - 6,500

Assume that William decides to use the election to expense on the baking equipment (and has adequate taxable income to cover the deduction) but not on the automobile (which has a 5-year recovery period), and he also uses the MACRS accelerated method to calculate depreciation but elects out of bonus depreciation.

Calculate William's maximum depreciation deduction for 2016, assuming he uses the automobile 100 percent in his business.

Reference no: EM131722278

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