What is the automobile basis for depreciation

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Sonny purchased an automobile for personal use on January 18, 2016 for $18,000. On January 1, 2020, Sonny starts a small business and begins to use the automobile exclusively in the business. the automobile's FMV on this date is $10,800. MACRS depreciation deductions are based on a 5-year recovery period.

Problem a. What is the automobile's basis for depreciation when converted to business use in 2020?

Problem b. Assuming Sonny does not elect Sec. 179 expensing and elects out of bonus depreciation, what is Sonny's depreciation deduction in 2020?

Reference no: EM132802728

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