Taxpayer N purchased numerous tax texts totaling $1,000 while obtaining his master's degree in taxation.This year he began teaching taxation when the books were valued at $700.Assuming he uses the texts as references in his profession, he may compute depreciation using a basis of $1,000.

Question

Quizplus · Accepted Answer

The basis for depreciation is the lower of the cost or the fair market value at the time the asset is placed in service. Since the books were valued at $700 when they began being used for teaching, the basis for depreciation would be $700, not the original purchase price of $1,000.

Taxpayer N Purchased Numerous Tax Texts Totaling $1,000 While Obtaining