Question

On April 5, 2018, Mary purchased and placed in service, new seven-year class assets costing $540,000 and five-year class assets costing $140,000. Both assets were placed in service on April 5, 2018. She elects to expense the maximum amount under § 179. She does take additional first-year depreciation. Assume taxable income is not a limitation. Determine Mary’s maximum cost recovery with respect to the assets for 2018.

Answer 1

For the specified conditions, it can be concluded that the gross rents paid with regard to apartments are not eighty percent (80%) or more of summed up (total) gross rents .

So, the entire building may not be regarded as residential rental real estate.

The tabular is given below:

Residential Calculations {(70% ´ $12,000,000) ´ .02879}	241,836 in dollars
Nonresidential Calculations {(30% ´ $12,000,000) ´ .02033}	73,188
Total cost recovery	315,024 in dollars