David Acquired an Automobile for $30,000 for Use in His

question 116

Essay

David acquired an automobile for $30,000 for use in his unincorporated business in 2011 and used the standard mileage rate method in 2012 and 2013.He switches to the actual expense method for 2014. The automobile was used 25,000 miles in 2012 and 20,000 miles in 2013.What is the amount of the adjusted basis of the automobile for purposes of computing depreciation in 2014?

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Definitions:

Immediate Market Period

A very short time frame in economics during which the supply of a good is completely fixed and cannot respond to changes in demand.

Supply

The total amount of a product or service that is available to consumers, which can vary based on price, production costs, and other factors.

Elastic

A term used in economics to describe the sensitivity of the demand or supply of a good or service to changes in its price.

Perfectly Inelastic

A situation in which the quantity demanded or supplied does not change regardless of any change in price.