Question

North Realty Co. purchases an apartment building in April 2020 at a cost of $730,000. The...

North Realty Co. purchases an apartment building in April 2020 at a cost of $730,000. The company follows a June 30 fiscal year-end. What cost recovery deduction can North Realty take in fiscal year 2020 (year ending June 30, 2020)?

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Answer #1

Based on the information available in the question, we can answer as follows,

Requirement - 1:-

Cost of the apartment building = $730,000

Per IRS, any residential property purchased would be depreciated over a period of 27.5 years.

Hence, the cost recovery deduction for the Apartment building is :- $730,000 * 0.758%

Cost recovery deduction for the Apartment building = $5,533.4

Cost recovery deduction = $5,533(Rounded)

Please let me know if you have any questions via comments and all the best :) !

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