Question

On May 15 of year 1 Javier purchased a building, including the land it was on, to assemble his new equipment. The total cost of the purchase was $1,344,000; $364,000 was allocated to the basis of the land and the remaining $980,000 was allocated to the basis of the building. (Use MACRS Table 1, Table 2, Table 3, Table 4and Table 5.) (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)

Problem 10-51 Part-b

b. What would be the year 3 depreciation deduction if the building was sold on October 13 of year 3?

Answer 1

b.)	Calculation of year 3 depreciation deduction if the building was sold on October 13 of year 3
	Year	3
	Method	Straight Line
	Recovery Period	39
	Basis	$ 980,000
	Rate	2.564%
	Total Depreciation for the year	$ 25,127
	Partial Year	9.5/12
	Depreciation Deduction for year 3	$19,892	( 25,127 x 9.5 )/ 12