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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
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 $ 1,587 X
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