In May 2017, Stephen Acquired a Used Automobile for $12,000

question 13

Multiple Choice

In May 2017, Stephen acquired a used automobile for $12,000 that he used 75% for business. No Sec. 179 election was made. In 2017, Stephen's business use of the automobile decreases to 45%. As a result of this change in business use:

• A) The change does not affect the way Stephen computes his 2017 depreciation
• B) Stephen's depreciation in 2017 is $2,250.
• C) Stephen must recapture $900 as ordinary income in 2017
• D) Stephen must amend the 2017 tax return and recompute depreciation.

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Definitions:

Small-Firm Stocks

Equity shares of smaller companies that are often characterized by higher growth potential and higher risk compared to large-cap stocks.

Real Growth

Economic growth adjusted for inflation, reflecting the true increase in value of goods and services produced by an economy.

Nominal Return

The amount of profit or loss generated by an investment without adjusting for inflation or other factors.

Inflation

The pace at which the overall price level of goods and services increases, leading to a decrease in buying power.