Keith is an insurance agent with an office near a river. He had the following assets:

Accumulated

Tax

Cost

Depreciation

Basis

Furniture

$9,000$

$9,000$

$0$

Computer

$3,000$

$2,136$

$864$

Copier

$3,000$

$3,000$

$0$

$15,000$

$14,136$

$864$

A flood destroyed all the assets. Keith's insurance reimbursed him $$12,000$ for the loss.

$$7,200$ for the furniture, and $$2,400$ each for the computer and copier.

Keith is planning to replace the computer at a cost of $$4,000,$ but he may work from home in the future and not replace the furniture or copier.

If Keith does buy a computer for $$4,000,$ what is its tax basis?

Is the new computer eligible for $179$ expense election?

What are the consequences of not replacing the furniture and copier?

Question $54$ options:

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