Question

A taxpayer purchases a property with an apartment building on it on April 2, 2019 at...

A taxpayer purchases a property with an apartment building on it on April 2, 2019 at a cost of

1,500,000. The apartment was fully rented at the time of purchase.

(a) how much depreciation for 2019?

(b) how much depreciation for 2020?

(c) if the property is sold on November 18, 2023, how much depreciation for 2023?

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Homework Answers

Answer #1

Rate of depreciation for 2023 after considering effect of mid month convention = 3.636% * (11-0.5)/12 = 3.1815%

Depreciation then is:

Year Basis × rate Depreciation
2019        1,500,000 2.576%     38,640.00
2020        1,500,000 3.636%     54,540.00
2023        1,500,000 3.1815%     47,722.50

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