On July 10,2010,Ariff places in service a new sports utility vehicle that cost $70,000 and weighed 6,300 pounds.The SUV is used 100% for business.Determine Ariff's maximum deduction for 2010,assuming Ariff's § 179 business income is $110,000.If Congress reenacts additional first-year depreciation for 2010,Ariff elects not to take additional first-year depreciation.

Question

Quizplus · Accepted Answer

The maximum deduction for a heavy SUV used entirely for business purposes in 2010 is $25,000. This limit is reduced by the amount by which the cost of the vehicle exceeds $25,000. In this case, the cost of the SUV is $70,000, which exceeds the limit by $45,000 ($70,000 - $25,000 = $45,000).

To calculate the actual deduction, we need to take Ariff's business income into consideration. Since his income is $110,000 and the SUV cost exceeds the limit by $45,000, the deduction would be limited to $34,000 ($110,000 - $76,000 = $34,000). Therefore, the correct answer is option C.

On July 10,2010,Ariff Places in Service a New Sports Utility