Problem

Mike purchases a heavy-duty truck (5-year class recovery property) for his delivery service on April 30, 2016. The truck is not considered a passenger automobile for purposes of the listed property and luxury automobile limitations. The truck has a depreciable basis of $39,080 and an estimated useful life of 5 years. Assume half-year convention for tax. Click here to access the depreciation tables. a. Calculate the amount of depreciation for 2016 using financial accounting straight-line depreciation (not the straight-line MACRS election) over the truck's estimated useful life. Round the per month rate to two decimal places and round your final answer to the nearest dollar. $ 5,211 Feedback Since many assets are used in the production of income over a number of years, income is not properly measured if the entire cost of these assets is deducted when the assets are purchased. Depreciation is the accounting process of allocating and deducting the cost of an asset over a period of years. b. Calculate the amount of depreciation for 2016 using the straight-line depreciation election, using MACRS tables over the minimum number of years with no bonus depreciation or election to expense. $ 3,908 Feedback Correct c. Calculate the amount of depreciation for 2016, including bonus depreciation but no election to expense, that Mike could deduct using the MACRS tables. $ d. Assume no income limit on the expense election. Calculate the amount of depreciation for 2016 including bonus depreciation and the election to expense that Mike can deduct.