Tony receives an automobile from his uncle, Ned, as a graduation gift. Ned used the vehicle only for commuting to his office during the 3 years he owned it. Ned paid $20,000 for the vehicle. It is valued at $8,000 on the date of the gift. Tony will use the automobile 100% of the time for his business. Determine Tony's basis in the automobile for depreciation purposes. Explain your answer in terms of the concepts of taxation.

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The Answer of Tony receives an automobile from his uncle, Ned, as a graduation gift. Ned used the vehicle only for commuting to his office during the 3 years he owned it. Ned paid $20,000 for the vehicle. It is valued at $8,000 on the date of the gift. Tony will use the automobile 100% of the time for his business. Determine Tony's basis in the automobile for depreciation purposes. Explain your answer in terms of the concepts of taxation.

Tony Receives an Automobile from His Uncle, Ned, as a Graduation