On May 31, 2014, Gustave purchases a new automobile for $28,000. He uses the car 90% for business and drives the car as follows:

On May 31, 2014, Gustave purchases a new automobile for $28,000. He uses the car 90% for business and drives the car as follows: 5,000 miles in 2014, 14,000 miles in 2015, 11,000 miles in 2016 and 9,800 miles in 2017. Gustave is self-employed.

Determine Gustave’s basis in the business portion of the auto as of January 1, 2018, under the following assumptions:

If required, carry out computations to two decimal places and then round your final answer to the nearest dollar.

a. Gustave uses the automatic mileage method.

Compute his basis adjustments for depreciation for each year.

2014: $______

2015: $______

2016: $______

2017: $______

Gustave’s adjusted basis in the auto on January 1, 2018, is $______

b. Gustave uses the actual cost method. [Assume that no § 179 expensing is claimed and that 200% declining-balance cost recovery with the half-year convention is used. Assume the recovery limitation for 2014 is as follows: $3,160 (first year), $5,100 (second year), $3,050 (third year) and $1,875 (fourth year).]

Compute his depreciation deductions for year.

2014: $______

2015: $______

2016: $______

2017: $______

Gustave’s adjusted basis in the auto on January 1, 2018, is $______