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Norm Purchases a New Sports Utility Vehicle (SUV) on October

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Essay

Norm purchases a new sports utility vehicle (SUV) on October 12, 2017, for $60,000. The SUV has a gross vehicle weight of 6,200 lbs. It is used 100% of the time for business and it is the only business asset acquired by Norm during 2017. Compute the maximum deduction with respect to the SUV for 2017. Norm does not take additional first-year depreciation.


Definitions:

Direct Materials

Fundamental materials directly identifiable in the creation of a product.

Direct Labor

The labor costs directly tied to the production of goods or the performance of services.

Overhead Cost

Overhead cost refers to ongoing business expenses not directly linked to creating a product or service, such as rent, utilities, and administrative costs.

Actual Overhead

The total real costs incurred for indirect materials, labor, and other expenses to operate a business, not directly tied to specific products or services.

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