Coordination of §179, 100 percent AFYD, and the luxury automobile limits
Example 1: SUV purchase with §179 election – Joey Bagofdonuts Superstar acquires a new Lincoln Navigator (SUV) for $75,000 on September 1, 2020
For 2020, depreciation is calculated as follows:
Cost $90,000
Less: §179 Deduction (25,900)
Subtotal Basis 64,100
Additional 1st-Year Deduction 100% (64,100)
Subtotal Basis 0
5-Year Regular MACRS (DDB, ½ Yr) ( 0)
Total 2020 Depreciation Deduction $90,000 (100%)Example 2: assume example 1: Joey Bagofdonuts Superstar purchases in 2020 without the election to apply §179
For 2020, depreciation is calculated as follows:
Cost $90,000
Less: §179 Deduction ( 0 )
Subtotal Basis 90,000
Additional 1st-Year Deduction 100% (90,000)
Subtotal Basis 0
5-Year Regular MACRS (DDB, ½ Yr) ( 0)
Total 2020 Depreciation Deduction $90,000 (100%)Example 3: Assume example 2: Joey Bagofdonuts Superstar purchases in 2020 was a used vehicle
For 2020, depreciation is calculated as follows:
Cost $90,000
Less: §179 Deduction ( 0 )
Subtotal Basis 90,000
Additional 1st-Year Deduction 100% (90,000)
Subtotal Basis 0
5-Year Regular MACRS (DDB, ½ Yr) ( 0)
Total 2020 Depreciation Deduction $90,000 (100%)
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accounting opinion or tax return position, and must be supplemented for such purposes with other current authoritative
materials. The information in this blog post has been carefully compiled from sources believed to be reliable, but its
accuracy is not guaranteed. In addition, Don Fitch Accountancy is not engaged in rendering legal or other professional services and will not be held liable for any actions or suits based on this
blog post or comments made during the above presentation. If legal advice or other expert assistance is required, seek the
services of a competent professional.
(Updated 02/27/2021 08:05)