In 2006, Sam purchased an antique desk at an auction for $2,000. He gave it to his father as a present in 2005. In April of 2016, Sam's father passed away, leaving the desk to Scott. The desk's value had increased to $4,000 despite some minor damage that had accumulated over the years. Scott paid another $3,000 to have the desk restored. After the restoration, the desk was appraised for $16,000.

1) If Sam decides to use the desk exclusively for business purposes, what is Sam's tax basis on the desk once it is put into service?

2) What depreciation convention and recovery period should Sam use on the desk?

3) What is the maximum amount of depreciation Sam can claim for the current year for the desk?

Question

In 2006, Sam purchased an antique desk at an auction for $2,000. He gave it to his father as a present in 2005. In April of 2016, Sam's father passed away, leaving the desk to Scott. The desk's value had increased to $4,000 despite some minor damage that had accumulated over the years. Scott paid another $3,000 to have the desk restored. After the restoration, the desk was appraised for $16,000.

1) If Sam decides to use the desk exclusively for business purposes, what is Sam's tax basis on the desk once it is put into service?

2) What depreciation convention and recovery period should Sam use on the desk?

3) What is the maximum amount of depreciation Sam can claim for the current year for the desk?

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