Walt purchased a computer for $3,600. He could use the computer exclusively for his business, or he could allow his family to use the computer 60% of the time and 40% would be for business use. Assume that Walt would not elect 179 expensing or 50% bonus, and that he is in the 25% tax bracket. (Use Table 6A-1 and Table 6-2)

Determine the tax deduction for the year of acquisition under both alternatives for the business use portion.

What is the overall tax savings between the two alternatives?

TABLE 6A-1 General Depreciation System 200% or 150% Declining Balance Switching to Straight-Line* Half-Year Convention Recovery Year 3-Year 5-Year 7-Year 10-Year 15-Year 20-Year 1 33.33 20.00 14.29 10.00 5.00 3.750 2 44.45 32.00 24.49 18.00 9.50 7.219 3 14.81 19.20 17.49 14.40 8.55 6.677 4 7.41 11.52 1 2.49 11.52 7.70 6.177 5 11.52 8.93 9.22 6.93 5.713 6 5.76 8.92 7.37 6.23 5.285 7 8.93 6.55 5.90 4.888 8 4.46 6.55 5.90 4.522 9 6.56 5.91 4.462 10 6.55 5.90 4.461 11 3.28 5.91 4.462 12 5.90 4.461 13 5.91 4.462 14 5.90 4.461 15 5.91 4.462 16 2.95 4.461 17 4.462 18 4.461 19 4.462 20 4.461 21 2.231

TABLE 6A-2 General Depreciation System 200% or 150% Declining Balance Switching to Straight-Line* Mid-Quarter Convention (Property Placed in Service in 1st Quarter) Recovery Year 3-Year 5-Year 7-Year 10-Year 15-Year 20-Year 1 58.33 35.00 25.00 19.50 8.75 6.563 2 27.78 26.00 21.43 16.50 9.13 7.000 3 12.35 15.60 15.31 13.20 8.21 6.482 4 1.54 11.01 10.93 10.56 7.39 5.996 5 11.01 8.75 8.45 6.65 5.546 6 1.38 8.74 6.76 5.99 5.130 7 8.75 6.55 5.90 4.746 8 1.09 6.55 5.91 4.459 9 6.56 5.90 4.459 10 6.55 5.91 4.459 11 0.82 5.90 4.459 12 5.91 4.460 13 5.90 4.459 14 5.91 4.460 15 5.90 4.459 16 0.74 4.460 17 4.459 18 4.460 19 4.459 20 4.460 21 0.557