Problem 9-33 (Algorithmic) (LO. 2) On July 1, 2011, Rex purchases a new automobi

Question

Problem 9-33 (Algorithmic) (LO. 2)

On July 1, 2011, Rex purchases a new automobile for $40,000. He uses the car 82% for business and drives the car as follows: 6,000 miles in 2011, 15,000 miles in 2012, 16,800 miles in 2013, and 12,000 miles in 2014. Determine Rex's basis in the auto as of January 1, 2015, under the following assumptions.

If required, round answers to the nearest dollar.

a. Rex uses the automatic mileage method.

Compute his basis adjustments for depreciation for each year. Click here to access the basis adjustment table.

2011: $

2012: $

2013: $

2014: $

Rex's adjusted basis in the auto on January 1, 2015, is $ .

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b. Rex uses the actual cost method. [Assume that no § 179 expensing is claimed and that 200% declining-balance cost recovery with the half-year convention is used.] The recovery limitation for an auto placed in service in 2011 is as follows: $3,060 (first year), $4,900 (second year), $2,950 (third year), and $1,775 (fourth year).]

Compute his depreciation deductions for year. Click here to access the depreciation table.

2011: $

2012: $

2013: $

2014: $

Rex's adjusted basis in the auto on January 1, 2015, is $ .

Explanation / Answer

a.

Working:

Calculation of depreciation each year = Cost of Automobilex(Car running for the year/Total running from the automobile) Year Depreciation Working                  2011                  3,952 32800*6000/49800                  2012                  9,880 32800*15000/49800                  2013               11,065 32800*16800/49800                  2014                  7,904 32800*12000/49800

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