On June 1, 2018, Irene places in service a new automobile that cost $21,000. The car is used 70% for business and 30% for personal use. (Assume this percentage is maintained for the life of the car.) She does not take additional first-year depreciation. Determine the cost recovery deduction for 2019.
A) $3,290
B) $3,570
C) $4,704
D) $10,000
E) None of the above

Question

Quizplus · Accepted Answer

The cost recovery deduction for 2019 is calculated as follows:
Total cost of automobile * business use percentage * depreciation percentage for year 2.
Total cost of automobile = $21,000
Business use percentage = 70%
Depreciation percentage for year 2 = 15.57%
($21,000 * 70% * 15.57% = $4,704)
Therefore, the correct answer is choice C.

On June 1, 2018, Irene Places in Service a New