Carl bought a heavy-duty truck (5-year class recovery property) for his business service on April 30. 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 five years. Its estimated salvage value is $1,080. Assume no election to expense is made and no bonus 50% depreciation deduction is elected. 1.

Calculate the amount of depreciation for the first year using financial accounting (not the straight-line MACRS election) straight-line depreciation over the truck’s estimated useful life. $__________
2.

Calculate the amount of depreciation for the first year using the straight-line depreciation election under MACRS over the minimum number of years. $__________
3.

Calculate the amount of accelerated depreciation for the first year that can be deducted using MACRS. $__________

1. 633

1. To calculate the amount of depreciation for the first year using financial accounting and straight-line depreciation over the truck's estimated useful life, you need to know the depreciable basis, useful life, and salvage value.

The formula for straight-line depreciation is: (Depreciable Basis - Salvage Value) / Useful Life

In this case, the depreciable basis is $39,080, the useful life is 5 years, and the salvage value is $1,080.

So, the calculation would be: ($39,080 - $1,080) / 5 = $7,800

Therefore, the amount of depreciation for the first year using financial accounting and straight-line depreciation is $7,800.

2. To calculate the amount of depreciation for the first year using the straight-line depreciation election under MACRS (Modified Accelerated Cost Recovery System), you need to know the depreciable basis, useful life, and the appropriate recovery period for the asset.

The recovery period for a heavy-duty truck is typically 5 years.

The formula for straight-line depreciation under MACRS is: (Depreciable Basis / Recovery Period)

Using the depreciable basis of $39,080 and a recovery period of 5 years:

$39,080 / 5 = $7,816

Therefore, the amount of depreciation for the first year using the straight-line depreciation election under MACRS is $7,816.

3. To calculate the amount of accelerated depreciation for the first year that can be deducted using MACRS, you need to use the appropriate recovery period and the Year 1 depreciation rate specified by the tax code.

For a heavy-duty truck with a 5-year recovery period, the depreciation rates for Year 1 are as follows:

20% - 1st Year
32% - 2nd Year
19.20% - 3rd Year
11.52% - 4th Year
11.52% - 5th Year

Using the depreciable basis of $39,080 and the Year 1 depreciation rate of 20%:

$39,080 * 20% = $7,816

Therefore, the amount of accelerated depreciation for the first year that can be deducted using MACRS is $7,816.