tax week 3 lesson 1

# tax week 3 lesson 1 - business use \$8,000 x.20.32 x 80 =...

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Week 3 Lesson 1 Elizabeth Sampson June 28, 2011 James Monroe

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On June 26, 2004, Elaine purchased and placed into service a new computer system costing \$8,000. The computer system was used 80 percent for business and 20 percent for personal use in both 2004 and 2005. Elaine claimed only regular MACRS depreciation. In 2006, the computer system was used 45 percent for business and 55 percent for personal use. Using MACRS depreciation the computer system was depreciated by 20% in 2004 and 32% in 2005, both at 80%
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Unformatted text preview: business use. \$8,000 x (.20 + .32) x 80% = \$3,328.00 In 2004 and 2005 the system would have been depreciated by 10% in 2004 and 20% in 2005, both at 80% business use. \$8,000 x (.1 + .2) x 80% = \$1,920.00 Recapture amount is \$3,328 - \$1,920 = \$1,408.00 the 2006 depreciation is (\$8,000 + \$1,408) = \$9,408.00 x 20% x 45% = \$846.72 Section 179 the recapture in 2006 would be (\$8,000 x 80%) = \$6,400 \$6,400 - \$1,920 = \$4,480.00...
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