Fundamentals of Taxation 2011 4th Edition by Ana Cruz, Debra Prendergast, Dan Schisler, Michael Deschamps

Exercise 52

Walt purchased a computer for $5,000. He could use the computer exclusively for his business, or he could allow his family to use the computer 60% of the time and 40% would be for business use. Determine the tax deduction for the year of acquisition under both alternatives. What is the overall tax savings between the two alternatives? Assume that Walt would not elect §179 expensing or the 50% bonus, and that he is in the 25% tax bracket.