Phil owns a ranch business and uses four-wheelers to do much of his work. Occasi
ID: 2347720 • Letter: P
Question
Phil owns a ranch business and uses four-wheelers to do much of his work. Occasionally, though, he and his boys will go for a ride together as a family activity. During year 1, Phil put 975 miles on the four-wheeler that he bought on January 15 for $14,800. Of the miles driven, only 200 miles was for personal use. Assume four-wheelers qualify to be depreciated according to the five-year MACRS schedule and the four-wheeler was the only asset Phil purchased this year.A. Calculate the allowable depreciation for year 1 (ignore the
Explanation / Answer
A. Dep exp. will be $2352.9 in year 1 Full MACRS dep exp= 20%x 14800= $2960 Business use%= 775miles/975miles= 79.49% Dep deduction for year 1= 79.49%x2960= 2352.9 B. Dep exp. will be $ 2609.536 Full MACRS dep exp= 32%x14800= $4736 Business use= 945 miles/ 1715 miles= 55.1% Dep deduction for year 2 = 55.1%x 4736= $ 2609.536