Arlington LLC purchased an automobile for $69,000 on July 5, 2020. What is Arlington's depreciation deduction for 2020 if its business-use percentage is 68 percent? (Ignore any possible bonus depreciation.)(Use Exhibit 10-10.)

Question

Quizplus · Accepted Answer

Using the MACRS Table, the automobile would be classified as a 5-year property and the depreciation deduction for 2020 would be calculated using the following formula:

Depreciation deduction = (Cost basis - Salvage value) x Depreciation rate

- Cost basis = $69,000 
- Salvage value = not provided, assumed to be $0 
- Depreciation rate for year 1 (2020) = 20.00%

Depreciation deduction = ($69,000 - $0) x 20.00% x 68% = $6,868

Therefore, the correct answer is C.

Arlington LLC Purchased an Automobile for $69,000 on July 5