On June 1, 2019, James places in service a new automobile that cost $40,000. The car is used 60% for business and 40% for personal use. (Assume this percentage is maintained for the life of the car.) James does not take additional first-year depreciation. Determine the cost recovery deduction for 2019.

The answer is given below;

Explanation:

As per Section 179 of IRS ,the maximum cost recovery shall be $25,000 for the vehicle if the vehicle is used more than 50% for business and its weight is between 6,000 pounds GVWR and 14,000 pounds GVWR.

We assume that weight of vehicle is between 6,000-14,000 pounds and the vehicle is 60% used in business. Further the vehicle is in service before 31 December 2019.Therefore the cost recovery deduction shall be $25,000 in 2019

due to the changes the federal reserve is making the unused reserves will impact the economy by them facing inflation. inflation is definfed as the increase in pricing of a good or service but the decline of the value of money used for purchasing those items. when the economy has a high inflation rate, they are subject to money loss and hurt on the economy.

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