Keith is an insurance agent with an office near a river. He had the following assets:

		Accumulated	Tax
	Cost	Depreciation	Basis
Furniture	9,000	9,000	0
Computer	3,000	2,136	864
Copier	3,000	3,000	0
	15,000	14,136	864

A flood destroyed all the assets. Keith’s insurance reimbursed him $12,000 for the loss.

$7,200 for the furniture, and $2,400 each for the computer and copier.

Keith is planning to replace the computer at a cost of $4,000, but he may work from home in the future and not replace the furniture or copier.

For Blank 1: If Keith does buy a computer for $4,000, what is its tax basis?

For Blank 2: Is the new computer eligible for §179 expense election?

For Blank 3: What are the consequences of not replacing the furniture and copier?

Answer rating: 100% (QA)

1 If Keith buys a computer for 4000 its tax basis will be 0 because he can claim the expen... View the full answer