Final answer:
The 2023 depreciation for the auto is $12,400. The half-year convention applies in this case and bonus depreciation is available. The total depreciation expense for 2023, taking into account both the half-year convention and the bonus depreciation, is $17,360.
Step-by-step explanation:
The 2023 depreciation for this auto is $12,400 (Option e).
The half-year convention assumes that the auto was acquired in the middle of the year and only deducts half of the depreciation that would be taken in a full year. For bonus depreciation, the Tax Cuts and Jobs Act (TCJA) allows 100% bonus depreciation for qualified property acquired and placed into service after September 27, 2017, and before January 1, 2023. Since Tupper Corp. purchased the auto in 2022 and it is used 100% for business, bonus depreciation is available.
The MACRS depreciation rate for 2023, using the half-year convention, is 20.00%. The depreciable basis of the auto, after subtracting the bonus depreciation, is $49,600 ($62,000 - $12,400). Therefore, the depreciation expense for 2023 will be $9,920 ($49,600 x 20.00%). However, since the half-year convention applies, the depreciation for 2023 will be half of the annual expense, which is $4,960 ($9,920 / 2). Adding back the bonus depreciation of $12,400 results in a total depreciation of $17,360 ($4,960 + $12,400), which is closest to option e.