David acquired an automobile for $30,000 for use in his unincorporated business at the beginning of 2019 and used the standard mileage rate method in 2019.He plans to switch to the actual expense method for 2020.The automobile was used 25,000 miles for business purposes in 2019.What is the amount of the adjusted basis of the automobile for purposes of computing depreciation in 2020?
A)$30,000
B)$16,625
C)$23,500
D)$23,750

Question

Quizplus · Accepted Answer

The adjusted basis is calculated by subtracting the depreciation component of the standard mileage rate from the original cost. In 2019, the depreciation component was $0.26 per mile. Therefore, 25,000 miles x $0.26 = $6,500. The adjusted basis is $30,000 - $6,500 = $23,500.

David Acquired an Automobile for $30,000 for Use in His