LO.1, 2, 3 Beth receives a car from Sam as a gift. Sam paid $35,000 for the car. He had used it for business purposes and had deducted $16,000 for depreciation up to the time he gave the car to Beth. The fair market value of the car is $15,000.

a. Assuming Beth uses the car for business purposes, what is her basis for depreciation?

b. What is the depreciation deduction for the first year? Assume Beth elects the straight-line method.

c. If Beth sells the car for $4,500 one year after receiving it, what is her gain or loss?

d. If Beth sells the car for $18,500 one year after receiving it, what is her gain or loss?