Determine his cost recovery deduction

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Q1. In 2012, Muhammad purchased a new computer for $16,000. The computer is used 100% for business. Muhammad did not make a § 179 election with respect to the computer. He does not claim additional first-year depreciation. If Muhammad uses MACRS statutory percentage method, determine his cost recovery deduction for 2014 for computing taxable income and for computing his alternative minimum tax.

Q2. Martha was considering starting a new business. During her preliminary investigations, she incurred the following expenditures:

Salaries $22,000

Travel 18,000

Professional fees 13,000

Interest on a short-term note 4,000

Martha begins the business on July 1 of the current year.

Martha begins the business on July 1 of the current year. If Martha elects § 195 treatment, determine her startup expenditure deduction for the current year.

Reference no: EM132048334

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