Question

Under MACRS, a sole proprietor who uses her own car 20% for personal purposes and 80% for business in her unincorporated company

a) Can deduct only 20% of the car's cost
b) Can deduct 80% of the car's cost
c) Cannot deduct any cost
d) Can deduct 100% of the car's cost

Answer 1

Under MACRS, a sole proprietor can deduct 80% of the car's cost if it is primarily used for business purposes.

Step-by-step explanation:

Under MACRS, a sole proprietor who uses her own car 20% for personal purposes and 80% for business in her unincorporated company can deduct 80% of the car's cost. This is because the car is primarily used for business purposes and the MACRS allows for the depreciation of business assets. The personal use portion of the car is not deductible.