Problem:
Luxury Auto Limitations
Tracy acquires an automobile (MACRS 5-year recovery) on March 1, 2013. He uses the automobile 70% of the time in his business and 30% of the time for personal use. The automobile cost $36,000, and no amounts are expensed under Sec. 179 or bonus depreciation.
Required:
Question 1: What is depreciation for 2013-2018 and any subsequent years?
Question 2: How would your answer to Part a change if the vehicle were a SUV with a gross vehicle weight rated (GVWR) of over 6,000 pounds and Tracy elected to expense the SUV under Sec. 179?
Question 3: What is the amount deductible in 2013 and 2014 if the taxpayer elects to take advantage of bonus depreciation?
Note: Provide support for your rationale.