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Christopher Just Purchased an Automobile for $40,000 Which He Plans

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Essay

Christopher just purchased an automobile for $40,000 which he plans to claim 100% as being for business use. In order to take advantage of MACRS and § 179, he plans to use the actual cost method for determining his deduction in the first year. In subsequent years, he will switch to the automatic mileage method. Comment on Christopher's proposed approach.


Definitions:

Share Premium

The amount received by a company over and above the face value of its shares when it issues them.

Capital in Excess

Funds that exceed the par value of issued stock, often referred to as additional paid-in capital or share premium.

U.S.GAAP

United States Generally Accepted Accounting Principles, a collection of rules and guidelines designed to improve and standardize accounting practices.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since it was acquired and put into use.

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