Conversion of Personal Asset to Business Use. Sid purchased an automobile for personal use on January 18, 2017 for $20,000. On January 1, 2021, Sid starts a small business and begins to use the automobile exclusively in the business. The automobile's FMV on this date is $12,000. MACRS depreciation deductions are based on a 5-year recovery period. a. What is the automobile's basis for depreciation when converted to business use in 2021? b. Assuming Sid does not elect Sec. 179 expensing and elects out of bonus depreciation, what is Sid's depreciation deduction in 2021?

Conversion of Personal Asset to Business Use. Sid purchased an automobile for personal use on January 18, 2017 for $20,000. On January 1, 2021, Sid starts a small business and begins to use the automobile exclusively in the business. The automobile's FMV on this date is $12,000. MACRS depreciation deductions are based on a 5-year recovery period. a. What is the automobile's basis for depreciation when converted to business use in 2021? b. Assuming Sid does not elect Sec. 179 expensing and elects out of bonus depreciation, what is Sid's depreciation deduction in 2021?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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