In 2016, Carl's Cards had the following expenses:

Officer Compensation: $65,000

Rents: $6,000

Deductible Interest: $1,000

Payroll Taxes: $4,973

Advertising: $10,000

Charitable Contribution: $10,000 cash (only $6,083 is deductible for tax purposes because of the limitation on charitable contributions)

In addition, Carl's Cards has two depreciable assets. Both assets are used 100% in the business (no listed property). Carl's Cards did not elect to expense any assets under 179 and elected not to take any168(k) bonus depreciation. These two assets are the only property that Carl's Cards has placed in service since the company was formed in 2015. Both assets are depreciated under MACRS GDS.

Asset #1: Purchased for $10,000 and placed in service on 1/1/2015. Asset #1 has a 5-year MACRS recovery period. For book purposes, Carl's Cards depreciates Asset #1 over 5 years using straight line depreciation and $0 salvage value (book depreciation = $2,000/year)

Asset #2: Purchased for $40,000 and placed in service on 1/1/2016. Asset #2 has a 5-year MACRS recovery period. For book purposes, Asset #2 is depreciated using the straight-line method with a 5-year useful life and $0 salvage value (book depreciation = $8,000/year).

8. What is Carl's Cards tax depreciation (not book depreciation) for the Asset #1 in 2016? Note: asset was placed in service in 2015, so this is year 2 depreciation for Asset #1.

9. What is Carl's Cards tax depreciation for Asset #2 in 2016?