On July 9, 2008, Tom Purchased a Computer (Five-Year Property

question 20

Essay

On July 9, 2008, Tom purchased a computer (five-year property for MACRS purposes)for $6,000, which he used in his sole proprietorship. He claimed $1,200 (0.20 × $6,000)of depreciation for 2008. On February 9, 2009, he transfers the computer and other assets of his sole proprietorship to Brewer Corporation in exchange for Brewer stock in a transfer qualifying under Sec. 351. What is the amount of depreciation for 2008 claimed by Tom? What is the amount of depreciation for 2009 claimed by Brewer Corporation? What is Brewer's basis in the computer on the date of transfer?

---

Definitions:

Vascular Tissue

The specialized tissue in plants that conducts water and nutrients through the plant body, comprising mainly of xylem and phloem.

Lignin

A substance found in many plant cell walls that confers rigidity and strength, particularly in woody tissues.

Polymer

A large molecule composed of repeating structural units, typically connected by covalent chemical bonds, found in many materials and biological systems.

Vascular Plants

Plants that have specialized tissues (xylem and phloem) for transporting water, nutrients, and sugars throughout the organism.