What is the maximum depreciation expense deduction for Year 2 (2015) for a passenger automobile, used 100 percent for qualified business use, placed in service on June 15, 2014 and costing $14,000 (the election to expense is not made and no bonus depreciation was taken)?

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Quizplus · Accepted Answer

The maximum depreciation expense deduction for Year 2 (2015) for a passenger automobile used 100 percent for qualified business use, placed in service on June 15, 2014, and costing $14,000 is calculated as follows: 
Year 1 depreciation: $14,000 x 14.52%* = $2,028 
Year 2 depreciation: ($14,000 - $2,028) x 20.93%* = $2,452 
Total depreciation expense deduction for Year 2 = $2,028 + $2,452 = $4,480

*Using the MACRS depreciation tables for a 5-year recovery period and assuming the automobile is placed in service in the middle of the month.

What Is the Maximum Depreciation Expense Deduction for Year 2