Question

Israel purchased a new passenger automobile on August 17, 2014, for $30,000. During the year the car was used 40% for business and 60% for personal use. Determine his cost recovery deduction for the car for 2014.

1) $500
2) $1,224
3) $1,500
4) $1,000
5) None of these choices are correct.

Answer 1

The cost recovery deduction for Israel's new passenger automobile for the year 2014 cannot be determined with the information provided, as there is insufficient data regarding specific IRS limits and depreciation methods.

Step-by-step explanation:

The question is asking to determine the cost recovery deduction for Israel's new passenger automobile for the year 2014. The business use percentage is 40% of the total use. To calculate the cost recovery deduction, multiply the cost of the car ($30,000) by the business use percentage (40%). However, the provided information and examples do not specifically address the rules for calculating cost recovery deductions (depreciation) for vehicles, which can be quite specific and involve limitations and special methods such as the Modified Accelerated Cost Recovery System (MACRS). Because of the missing information required to accurately calculate the deduction (such as the IRS depreciation limits for luxury vehicles for that tax year), we cannot determine the correct answer from the options provided or the information given. Therefore, none of the choices are correct as there's insufficient data to conclude the precise cost recovery deduction.