Question

William bought a new home and decided to convert his original home into a rental. At...

William bought a new home and decided to convert his original home into a rental. At the time it was rented, the adjusted basis of the rental home was $ 125,000, including a land value of $ 20,000. The FMV was $ 250,000, including a land value of $ 40,000. He advertised the house for rent on June 1, 2017, and it was rented June 15, 2017. What is the depreciation for the first year.

1) $ 2,069 2) $ 2,463 3) $ 4,137 and 4) $ 4,925

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Calculating the depreciation for the first year:

Before calculating the depreciation we have to calculate the cost of basis for such rental property.When a personal residence has been converted for the business use or for use in getting in the income,in such case the basis for the depreciation is the lower of the adjusted basis of such property or FMV of such property excluding land.

(A) Adjusted basis of property excluding land(125000-20000) $105000

(B) FMV of property excluding land (250000-40000) $ 210000

Lower of the A or B = 105000

As per IRS life of the such asset is 27.5 years

Depreciation for the year = 105000/27.5 * 6.5months = $2069

Note :For the purpose of the above the accounting period has been taken from Jan - Dec and and also since no life of the asset was provided IRS notified rate has been taken

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Mona wants to compare Sch E results when the special/bonus depreciation allowance is elected versus when...
Mona wants to compare Sch E results when the special/bonus depreciation allowance is elected versus when it is not. Therefore, prepare returns for both scenarios. She does want to take advantage of the de minimis safe harbor election, if any of the new property applies. Mona rented a single family home since Sept 3, 2001. At that time the adjusted basis was $154,000 and land was valued at $11,600. She received $1,020 per month in rent for 12 months during...
1) Charles wants to relocate to Florida.  He decided to sell his rental property, which is located...
1) Charles wants to relocate to Florida.  He decided to sell his rental property, which is located in Brooklyn, NY. Charles accepted the following terms: Charles received $1,200,000 in cash and was relieved of $800,000 mortgage. (this was the outstanding balance at the time the transaction closed). Charles was responsible for broker's fees and legal costs associated with transferring the mortgage of $35,000 and $17,500, respectively.   Charles' adjusted basis in the rental property is $600,000. (The $600,000 is net of $750,000...
14. Jim, single, took out a mortgage on his home for $590,000 five years ago. In...
14. Jim, single, took out a mortgage on his home for $590,000 five years ago. In September of this year, when the home had a fair market value of $620,000 and he owed $550,000 on the mortgage, he took out a home equity loan for $80,000. Will used the funds to purchase a yacht to be used for recreational purposes. What is the maximum amount of debt on which he can deduct home equity interest? a. $70,000. b. $80,000. c....
1) On March 5, 2015, Steven purchased a new Ford Focus for use of his job....
1) On March 5, 2015, Steven purchased a new Ford Focus for use of his job. The car cost $24,000 (including sales tax), with no trade-in involved. The car was driven 14,000 miles in 2015 and 18,000 in 2016 with usage as follows: 20% for his commute to the office and 80% for business trips. The mileage for 2016 was evenly distributed throughout the year. Steven deduts ACTUAL operating costs for his vehicle, using the 200% declining balance method with...
Al-Mustafa Lodges maintains its accounting records on the basis of a fiscal year ending June 30....
Al-Mustafa Lodges maintains its accounting records on the basis of a fiscal year ending June 30. The following information is available as a basis for adjusting entries at June 30, 1997. Prepare a separate adjusting journal entry for each of the eight numbered paragraphs, which you believe to require an adjustment. Depreciation of the building for the year ended June 30 amounts to Rs. 141,250. A 36-month fire insurance policy had been purchased on June 1 of the current year....
You are working as an accountant at a mid-size CPA firm. One of your clients is...
You are working as an accountant at a mid-size CPA firm. One of your clients is Bob Jones. Bob’s personal information is as follows: DOB: October 10, 1952 SSN: 444-00-4444 Marital Status: Single Home Address: 5100 Lakeshore Drive, Pensacola, FL 32502 Bob has a very successful used car business located at 210 Ocean View Drive in Pensacola, Florida. Last year, you filed a Schedule C for Bob that had $1,200,000 in taxable income. The business will have an income growth...
Tom, an ornithologist, had been debating for years whether to venture out on his own and...
Tom, an ornithologist, had been debating for years whether to venture out on his own and operate his own business. He had developed a lot of solid relationships with clients and he believed that many of them would follow him if he were to leave his current employer. As part of a New Year’s resolution, Tom decided he would finally do it. Tom put his business plan together and, on January 1 of this year, Tom opened the doors of...
ATHI AND DARRIN LOVETTE CASE: Kathi and Darrin Lovette Background Kathi and Darrin Lovette, both age...
ATHI AND DARRIN LOVETTE CASE: Kathi and Darrin Lovette Background Kathi and Darrin Lovette, both age 63, have been married for 40 years, are both in good health, and they are citizens and residents of Louisiana. They expect to work until age 66 to 70. Kathi and Darrin live in a community property state. They have the following children and grandchildren: Children Age Grandchildren Elizabeth Age 40 4 children (ages 15, 14, 13 & 12) James Age 35 3 children...
Tax Return Project James A. Varney and Denise M. Varney James and Denise Varney are married...
Tax Return Project James A. Varney and Denise M. Varney James and Denise Varney are married and file a joint return. James is 48 years of age and Denise is 49. James is employed full-time as an electrical engineer for Livingston Unitech Corporation, Ltd. Denise is a self-employed design consultant. They have two children, Pamela and Vernon, who live at home and receive all of their support from their parents. Pamela is 20 years old and attended college on a...
Question: What is the amount of cash received from the sale of equipment if Horizon Insurance...
Question: What is the amount of cash received from the sale of equipment if Horizon Insurance elects to outsource publishing to G-Art? Use the following case to help determine the answer: Horizon Insurance (HI) was a full-service regional insurance agency that has done all the printing and publishing of its own promotional brochures, newsletters, informational pamphlets, and required regulatory reports. Linda Wolfe, the business manager of the agency, had for some time thought that the firm might save money and...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT