1. What if a computer, car, or airplane is purchased and used for both business and personal purposes? Mixed-use property must be predominately used in a qualified business to be entitled to ACRS – i.e., its business use must be greater than 50%. 280F(d)(4)(A) tells you what “listed property” is. If listed property is not used at least 50% for business purposes, there are two penalty provisions:
a. 280F(b)(1). You’re demoted from fast ACRS to alternative depreciation under 168(g). In addition, you can’t qualify for 179 expensing. But Congress wasn’t satisfied with just penalizing the under-50% business use, so it enacted the luxury car provision as well.
b. 280F(a). Even if you’re using your luxury car more than 50% in a trade or business, Congress is going to cap the amount of deductions you can take under ACRS. See 280F(a)(1)(A).
We have located some similar legal questions and legal question categories. Check out these challenging questions that askquestions about Tax Law and are similar to What is meant by Mixed Assets?. Also, we have included a list of some of our more popular legal question categories. These categories are based on what everyone is asking and answering.