Max closed his radio repair business last October. This January, he joins RPR Repair Shop as a general partner. His only contribution to RPR is the pickup truck he used 100% for business. He purchased the truck new last March for $17,500 and elected not to expense any of the cost under Section 179. He chose to depreciate the truck using the straight line method with half-year convention and a 5-year recovery period. As documented, he took $1,750 depreciation the first year (10% of the depreciable basis) and expected to take $3,500 (20%) depreciation for the second year. His adjusted basis January this year when he joins RPR is $15,750 and its fair market value (FMV) is $16,500.

This is a two-part question. Question 1: What adjusted basis should RPR use for the pickup truck contributed by Max?

Question 2: What amount of depreciation should RPR take this year on the pickup truck?

a) $16,500; $3,300

b) $16,500; $1,650

c) $15,750; $3,500

d) $15,750; $5,600