Arlington LLC purchased an automobile for $55,000 on July 5, 2018. What is Arlington's depreciation expense for 2018 if its business use percentage is 75 percent (ignore any possible bonus depreciation)? Exhibit 10-10
A) $4,250.
B) $5,500.
C) $7,500.
D) $8,250.
E) None of the choices are correct.

Question

Arlington LLC purchased an automobile for $55,000 on July 5, 2018. What is Arlington's depreciation expense for 2018 if its business use percentage is 75 percent (ignore any possible bonus depreciation)?  Exhibit 10-10
A) $4,250.
B) $5,500.
C) $7,500.
D) $8,250.
E) None of the choices are correct.

Quizplus · Accepted Answer

A luxury auto's maximum depreciation in the first year is the lesser of $10,000 or its MACRS amount of $11,000 ($55,000 × 20%). That amount is then multiplied by the business use percentage to obtain $7,500 ($10,000 × 75%).

Arlington LLC Purchased an Automobile for $55,000 on July 5