John purchased a new gasoline-electric hybrid automobile on July 2, 20X1, for $18,000. He also claimed a $2,000 clean-fuel vehicle deduction on his 20X1 tax return for that vehicle. In 20X1, John used this automobile only for personal purposes. On January 1, 20X3, he began using the hybrid automobile exclusively for business purposes. The fair market value of the automobile on that day was $17,000. What is the automobile's depreciable basis as of January 1, 20X3?
A) $15,000
B) $16,000
C) $17,000
D) $18,000

Q&A Education