Question

On July 10, 2019, Ariff places in service a new SUV that cost $70,000 and weighed 6,300 pounds. The SUV is used 100% for business. Determine Ariff's maximum deduction for 2019, assuming Ariff's § 179 business income is $110,000. Ariff does not take additional first-year depreciation.

Answer 1

$34,000

Step-by-step explanation:

Because the SUV weighs over 6,000 pounds, it is not subject to the statutory dollar limits on luxury automobiles.

Under section 179 expensing (limited to $25,000 for SUVs)

= $25,000

Regular MACRS:

= [($70,000 - $25,000) × 0.20}]

= 9,000

Ariff's maximum deduction for 2019 would be:

= $25,000 + $9,000

= $34,000