Tom Acquired a Used Five-Year Class Asset on November 5

question 56

Essay

Tom acquired a used five-year class asset on November 5, 2012 for $20,000. This was the only asset Tom acquired in 2012. He placed the asset in service on January 20, 2013. However, because the asset was purchased in 2012, Tom deducted regular MACRS cost recovery on the asset for the year 2012.He did not elect to expense any of the asset under § 179. In 2013, Tom purchased no assets and because he had no taxable income, he did not deduct any cost recovery. In 2014, Tom sold the five-year asset on September 25th. Determine the basis of the five-year asset at the time of the sale.

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Definitions:

Trapezius

A large superficial muscle that extends longitudinally from the occipital bone to the lower thoracic vertebrae and laterally to the spine of the scapula, involved in moving the shoulder and neck.

Pectoralis Major

A large muscle in the upper chest that performs functions related to the movement of the shoulder joint, including flexion, adduction, and medial rotation.

External Abdominal Oblique

A muscle located on the lateral and front sides of the abdomen, involved in rotating and bending the trunk.

Corrugator Supercilii

A small, narrow muscle close to the eyebrow, responsible for drawing the eyebrow downward and medially, creating frown lines on the forehead.