Question

For a new car that is used predominantly in business, the "luxury auto" limit depends on whether the taxpayer takes MACRS or straight-line depreciation.

a. True
b. False

Answer 1

The 'luxury auto' limit for a new car used predominantly in business does not depend on whether the taxpayer takes MACRS or straight-line depreciation.

Step-by-step explanation:

The statement that the 'luxury auto' limit for a new car used predominantly in business depends on whether the taxpayer takes MACRS or straight-line depreciation is False.

The 'luxury auto' limit refers to the maximum amount of depreciation that can be claimed for tax purposes on a luxury car used for business purposes. The limit is the same regardless of whether MACRS or straight-line depreciation is used.

However, the limit does depend on the year the car was placed in service. In 2021, the limit is $18,200 for the first year and $16,400 for each subsequent year. These limits apply to all cars, regardless of the depreciation method used.