Maxcom Inc. purchased 15 passenger automobiles for use by its sales force. Which of the following statements is true?
A) Maxcom must use the straight-line method to depreciate the passenger automobiles for tax purposes.
B) Maxcom's annual tax depreciation on the passenger automobiles may be limited to an amount less than MACRS depreciation.
C) Maxcom's annual tax depreciation on the passenger automobiles is computed under MACRS.
D) Even though Maxcom purchased the automobiles for business use, Maxcom is not allowed any tax depreciation for the automobiles.

Question

Quizplus · Accepted Answer

The IRS imposes limits on the amount of depreciation that can be claimed on passenger automobiles, which may result in a lower depreciation amount than what would be calculated under the Modified Accelerated Cost Recovery System (MACRS).