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

question 10

Essay

Fonzi purchases a personal computer for $4,000 on March 19, 2018. 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, 2018, 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 2018??

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Definitions:

Foreign Corrupt Practices Act

A U.S. law that prohibits companies and their individuals from bribing foreign officials to gain a business advantage.

Antifraud Provisions

Legal measures designed to prevent fraudulent activities, especially in securities, financial transactions, and corporate practices.

1934 Act

Pertains to the 1934 Securities Exchange Act, which regulates U.S. securities trading and led to the creation of the SEC.

Securities Act of 1933

A U.S. law enacted to protect investors by requiring transparency in financial statements so investors can make informed decisions about securities.