Carolyn purchases a new delivery truck (5-year MACRS property)costing $508,000 for use in her floral business on January 5,2017.If Carolyn's taxable income from the floral business before any special elections is $8,000 for 2017,what is her maximum allowable cost recovery on the delivery truck in 2017?

Question

Quizplus · Accepted Answer

Since the truck is a 5-year MACRS property, the depreciation percentage for 2017 is 20%. Therefore, the maximum allowable cost recovery is:

20% x $508,000 = $101,600

However, since Carolyn's taxable income is only $8,000, she can only deduct up to that amount. Therefore, her maximum allowable cost recovery for 2017 is $8,000.

Carolyn Purchases a New Delivery Truck (5-Year MACRS Property)costing $508,000