Jamie purchased $100,000 of new office furniture for her business in June of the current year. Jamie understands that if she elects to use ADS to compute her regular income tax, there will be no difference between the cost recovery for computing the regular income tac and the AMT.

Jamie wants to know the present value of the tax cost, after three years, of using ADS rather than MACRS. Assume that Jamie does not elect 179 expensing, she does not claim any additional first-year depreciation, and her marginal tax rate is 28%. See Appendix F for present value factors, and assume a 6% discount rate.

What is the present value of the tax savings/costs that result over the life of the asset if Jamie uses MACRS rather than ADS?

South-Western Federal Taxation 2017: Essentials of Taxation: Individuals and Business Entites. By: Raabe, Maloney, Young, Nellen.