Fonzi Purchases a Personal Computer for $4,000 on March 19,2016

question 74

Essay

Fonzi purchases a personal computer for $4,000 on March 19,2016.He used it personally for correspondence,keeping track of personal finances,and on-line data base services.His children used it for schoolwork and games.On June 1,2016,Fonzi starts a new secretarial service business and he converts the personal computer to 100% business use.The computer is worth $2,500 at the time (similar computers were selling for that amount in the used-computer market).
a.What is Fonzi's depreciable basis? Briefly explain your reasoning.
b.Fonzi desires to minimize depreciation deductions on the computer. What is the minimum allowable depreciation for 2016?

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Definitions:

Trephination

An ancient medical intervention in which a hole was drilled or scraped into the human skull, possibly to treat health issues related to intracranial pressure or as a ritualistic or spiritual practice.

Hypnotism

An absorbed state characterized by focused awareness and heightened openness to suggestion, commonly utilized for healing purposes.

Psychogenic

Originating in the mind or caused by psychological factors.

Abnormal Functioning

Patterns of behavior, thought, or emotion considered to deviate significantly from what is typically observed or expected.