Brittany started a law practice as a sole proprietor. She owned a computer, prin

ID: 2562212 • Letter: B

Question

Brittany started a law practice as a sole proprietor. She owned a computer, printer, desk, and file cabinet she purchased during law school (several years ago) that she is planning to use in her business. What is the depreciable basis that Brittany should use in her business for each asset, given the following information?

Asset Purchase Price FMV at Time Converted

Computer $2,500 $600

Printer $300 $150

Desk $1,200 $900

File cabinet $200 $225

Explanation / Answer

Depreciable basis that Brittany should use in her business for each asset shall be Lower of
(1) Fair Market Value at time of conversion or (2) Purchase price

Asset

Purchase Price

FMV at time Conversion

Lower of Purchase price (or) FMV

Computer

2500

600

600

Printer

300

150

150

Desk

1200

900

900

File Cabinet

200

225

200