In May 2018, Stephen acquired a used automobile for $12,000 that he used 75% for business.Neither Section 179 election nor bonus depreciation was claimed.In 2019, Stephen's business use of the automobile decreases to 45%.As a result of this change in business use:
A)The change does not affect the way Stephen computes his 2019 depreciation
B)Stephen's depreciation in 2019 is $2,250.
C)Stephen must recapture $900 as ordinary income in 2019
D)Stephen must amend the 2018 tax return and recompute depreciation.

Question

Quizplus · Accepted Answer

When business use of an asset falls below 50%, the taxpayer must recapture the excess depreciation taken in prior years as ordinary income.

In May 2018, Stephen Acquired a Used Automobile for $12,000