On July 1, 2016
Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization
Section: Chapter Questions
Problem 56P
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Question
On July 1, 2016, Rex purchases a new automobile for $40,000. He uses the car 80% for business and drives the car as follows: 8,000 miles in 2016, 19,000 miles in 2017, 20,000 miles in 2018, and 15,000 miles in 2019. Determine Rex’s basis in the business portion of the auto as of January 1, 2020, under the following assumptions:
Expert Solution
Step 1
Year | Miles | Rate per mile | Amount | Usage | Depreciation |
2016 | 8000 | $0.24 | 1920 | 80% | 1536 |
2017 | 19000 | $0.25 | 4750 | 80% | 3800 |
2018 | 20000 | $0.25 | 5000 | 80% | 4000 |
2019 | 15000 | $0.26 | 3900 | 80% | 3120 |
Total | 12456 | ||||
Rex adjusted basis in the auto on january 1,2020 is | |||||
(40000 x 80%) -12456 | $ 19544 |
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