YumYum Corporation (a calendar-year corporation) moved into a new office building adjacent to its manufacturing plant in 2019.It purchased and placed in service the following assets during 2019: $\begin{array}{ccr}
\underline{\text {Date Acquired}}&
\underline{\text {Asset Description}}&\underline{\text {Cost}}\
\text { March 4 } & \text { New Office Building } & \$ 850,000 \
\text { March 15 } & \text { New Computer Equipment } & 45,000 \
\text { March 25 } & \text { New Office Furniture } & \$ 25,000 \
\text { August 20 } & \text { Used Machinery } & \$ 120,000 \
\text { December 15 } & \text { New Automobile } & \$ 30.000
\end{array}$

All assets are used 100% for business use.The office building does not include the cost of the land on which it is located that was an additional $300,000.The corporation had $900,000 income from operations before calculating depreciation deductions.YumYum Corporation made any elections available to maximize its overall depreciation deduction for 2019.What is its maximum depreciation deduction on the new automobile in 2019?
A)$10,000
B)$11,160
C)$18,100
D)$30,000

Question

YumYum Corporation (a calendar-year corporation) moved into a new office building adjacent to its manufacturing plant in 2019.It purchased and placed in service the following assets during 2019: $\begin{array}{ccr}
\underline{\text {Date Acquired}}&
\underline{\text {Asset Description}}&\underline{\text {Cost}}\
\text { March 4 } & \text { New Office Building } & \$ 850,000 \
\text { March 15 } & \text { New Computer Equipment } & 45,000 \
\text { March 25 } & \text { New Office Furniture } & \$ 25,000 \
\text { August 20 } & \text { Used Machinery } & \$ 120,000 \
\text { December 15 } & \text { New Automobile } & \$ 30.000
\end{array}$

All assets are used 100% for business use.The office building does not include the cost of the land on which it is located that was an additional $300,000.The corporation had $900,000 income from operations before calculating depreciation deductions.YumYum Corporation made any elections available to maximize its overall depreciation deduction for 2019.What is its maximum depreciation deduction on the new automobile in 2019?
A)$10,000
B)$11,160
C)$18,100
D)$30,000

Quizplus · Accepted Answer

The maximum depreciation deduction for the new automobile in 2019 is $18,100. This is because the automobile is a five-year property and YumYum Corporation elected to use the 100% first-year bonus depreciation deduction. The bonus depreciation deduction is equal to 100% of the cost of the property, so the deduction for the automobile is $30,000. The remaining $11,900 of the cost of the automobile is depreciated over the remaining four years of its useful life.

YumYum Corporation (A Calendar-Year Corporation) Moved into a New Office