Zachary purchased a new car on August 1, 2018 for $14,500.His records indicate that he uses the car 45 percent for business and 55 percent for personal use.What are his cost recovery deductions for 2018 and 2019?

Question

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The cost recovery deduction (depreciation) for a car used for business purposes is based on the percentage of business use and the IRS's depreciation system. Since Zachary uses the car 45% for business, only that portion of the car's cost is depreciable. The IRS provides specific depreciation limits for cars each year. For 2018, the first-year limit for a car is $10,000, but since Zachary purchased the car mid-year and the car is used 45% for business, his deduction would be less than this limit, prorated for the part of the year he used the car for business. The correct answer reflects a realistic depreciation amount for the first and second years under these conditions, considering both the business use percentage and the IRS's depreciation limits.

Zachary Purchased a New Car on August 1, 2018 for $14,500.His