On July 17,2016,Kevin places in service a used automobile that cost $25,000.The car is used 80% for business and 20% for personal use.In 2017,he used the automobile 40% for business and 60% for personal use.Determine the cost recovery recapture for 2017.
A)$0
B)$528
C)$2,000
D)$2,500
E)None of the above

Question

Quizplus · Accepted Answer

In 2016, Kevin could claim depreciation based on 80% business use. In 2017, the business use dropped to 40%, which is less than 50%, triggering recapture. The recapture amount is the difference between the depreciation claimed in 2016 and the depreciation allowable in 2017. The depreciation recapture is calculated as: ($25,000 x 80% x 20% MACRS rate) - ($25,000 x 40% x 20% MACRS rate) = $2,000 - $1,472 = $528.

On July 17,2016,Kevin Places in Service a Used Automobile That