54. Dennis Harding is considering acquiring a new automobile that he will use 10
ID: 2387040 • Letter: 5
Question
54. Dennis Harding is considering acquiring a new automobile that he will use 100% for business. The purchase price of the automobile would be $35000. If Dennis leased the car for five years , the lease payments would be $375 per month. Dennis will acquire the car on January 1, 2011. The inclusion dollar amounts from the IRS table for the next five years are $40, $87, $130, $156, and $179. Dennis desires to know the effect on his adjusted gross income of purchasing versus leasing the car for the next five years. He elects not to take additional first-year depreciation. Write a letter to Dennis and present your calculations. Also, prepare a memo for the tax files. His address is 150 Avenue I, Memphis, TN 38112.Explanation / Answer
Purchase – cost recovery deduction
200 6 $35,000x20%= $7,000) is limited to 2,960 ------------- $ 2,960
2008 $35,000x32% is limited to $4,800) ------------------ 4,800
2009 $35,000x19.2% is limitedto $ 2,850 ------------- 2,850
2010 $35,000x11.52% is limitedto $ 1,675------------1,675
20011 $35,000x11.52% is limitedto $ 1,675------------- 1,675
Total cost recovery deduction --------------------------------- $ 13,960
Lease payments ($375 x60) ------------------------------- $22,500
Inclusion of dollar amount = $87, $130, $156, and $179= $ 779
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.