Question

Lopez acquired a building on June 1, 2014, for $17,688,800. Compute the depreciation deduction assuming the...

Lopez acquired a building on June 1, 2014, for $17,688,800. Compute the depreciation deduction assuming the building is classified as (a) residential and (b) non residential.

use the depreciation table to solve this problem.

If required, round your answers to the nearest dollar.

a. Calculate Lopez's cost recovery deduction for 2019 if the building is classified as residential rental real estate.
$_______.

b. Calculate Lopez's cost recovery deduction for 2019 if the building is classified as nonresidential real estate.
$_______.

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Answer #1

Answer

a. Lopez's cost recovery deduction for 2019 if the building is classified as residential rental real estate.

  • If classified as Residential = $1768800 * 3.6363% = $64318.87

(residential real estate has a useful life of 27.5 years)

b. Calculate Lopez's cost recovery deduction for 2019 if the building is classified as nonresidential real estate.

  • If classified as Non-Residential = $1768800 * 2.5641% = $45353.80

(non-residential real estate has a useful life of 39 years)

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