Enrico is a self-employed electrician.In May of the current year,Enrico acquired a used van (5-year property)for $12,000.He used the van 80% for business and 20% for personal purposes.Enrico does not take any Sec.179 deduction.The maximum depreciation deduction for is
A)$1,200.
B)$2,400.
C)$6,720.
D)$1,920.

Question

Quizplus · Accepted Answer

The maximum depreciation deduction is calculated using the Modified Accelerated Cost Recovery System (MACRS) for 5-year property. Since Enrico uses the van 80% for business, the depreciable basis is $12,000 * 80% = $9,600. Using the MACRS 200% declining balance method, the first-year depreciation rate is 20%. Therefore, the maximum depreciation deduction is $9,600 * 20% = $1,920.

Enrico Is a Self-Employed Electrician