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Jake purchased a new apartment building on March 20, 2019, for $3,000,000 (including $700,000 for the...

Jake purchased a new apartment building on March 20, 2019, for $3,000,000 (including $700,000 for the land). On December 20, 2020, the building was sold. Determine the depreciation deduction for 2020.

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Answer #1

cost of building on march 20, 2019 = $ 30,00,000 - $ 700000 = $ 2300000

Depreciation for the year = $ 2300000 * 5% = $ 115000

WDV of building on march 20, 2020 = $ 2300000 - $ 115000 = $ 2185000

Depreciation upto december 20, 2020 = ($ 2185000 * 5%) * 9/12 = $ 81937.5

Note:- 1. Buildings which are used mainly for residential purposes except hotels and boarding houses then depreciation allowance is 5% .

2. Land is not depreciated because land is assumed to have an unlimited useful life.

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