1)Sally purchased a new computer (5-year property) on June 1, 2020, for $4,000. Sally could use the computer 100% of the time in her business, or she could allow her family to use the computer as well. Sally estimates that if her family uses the computer, the business use will be 45% and the personal use will be 55%.

Determine the tax cost to Sally, in the year of acquisition, of allowing her family to use the computer. Assume that Sally would not elect 179 immediate expensing and that her marginal income tax rate is 32%. She does not claim any available additional first-year depreciation.

If required, round your answer to the nearest dollar. Click here to access the depreciation tables to use for this problem.

a. What is the amount of the depreciation deduction if the computer is used 100% for business?$ 800

b. If Sally allows 55% personal use of the computer by her family, then the amount of the depreciation deduction is $?

c. What is the tax cost to Sally, in the year of acquisition, of allowing her family to use the computer $?

2)Burt purchased $58,000 of new computers for his business in May of the current year. Burt understands that if he elects to use ADS to compute his regular income tax, there will be no difference between the cost recovery for computing the regular income tax and the AMT. Burt wants to know the regular income tax cost, after three years, of using ADS rather than MACRS.

Assume that Burt does not elect 179 limited expensing and that his marginal tax rate is 15%. He does not claim any available additional first-year depreciation.

If required, round your final answers to the nearest dollar.

Click here to access the depreciation tables to be used for this problem.

a. The cost recovery under MACRS at the end of three years is $?

b. The cost recovery under ADS (for AMT purposes) at the end of three years is $?

c. Assuming a marginal tax rate of 24%, the income tax cost after three years of using ADS instead of MACRS is $?

3 4 For Property Placed in Service after December 31, 1986 Recovery 3-Year 5-Year 7-Year 10-Year 15-Year 20-Year Year (200% DB) (200% DB) (200% DB) (200% DB) (150% DB) (150% DB) 1 33.33 20.00 14.29 10.00 5.00 3.750 2 44.45 32.00 24.49 18.00 9.50 7.219 14.81* 19.20 17.49 14.40 8.55 6.677 7.41 11.52* 12.49 11.52 7.70 6.177 5 11.52 8.93* 9.22 6.93 5.713 6 5.76 8.92 7.37 6.23 5.285 8.93 6.55 5.90 4.888 4.46 6.55 5.90 4.522 6.56 5.91 4.462* 10 6.55 5.90 4.461 11 3.28 5.91 4.462 12 5.90 4.461 13 5.91 4.462 14 5.90 4.461 15 5.91 4.462 16 2.95 4.461 17 4.462 18 4.461 19 4.462 20 4.461 21 2.231