Question

On December 8, 2019, Holly purchased a residential apartment building. The cost basis assigned to the...

On December 8, 2019, Holly purchased a residential apartment building. The cost basis assigned to the building is $186,600. Holly also owns another residential apartment building that she purchased on August 15, 2019, with a cost basis of $145,500.

Click here to access the depreciation tables.

If required, round intermediate calculations and final answers to nearest dollar.

a. Calculate Holly's total depreciation deduction for the apartments for 2019 using MACRS.
$

b. Calculate Holly's total depreciation deduction for the apartments for 2020 using MACRS.
$

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Homework Answers

Answer #1

The depreciation deduction for the apartments in 2019 using MACRS:-

The MACRS Class life for a residential building is 27.5 yerars.

We use the MACRS Straight line depreciation Residential property table for calculating the percentage of depreciation to be allocated.

Depreciation for building purchased on dec 8, 2019 - $186600 * 2.879% = $5372.214

Depreciation for building purchased on Aug 15, 2019 - $145500 * 0.758% = $1102.89

Total Depreciation for 2019 =$ 6475
The depreciation deduction for the apartments in 2020 using MACRS:-

Both the residential apartment building has been used for the whole year during 2020. Hence, the rate of depreciation would be 3.636% on both the apartments

Depreciation for building purchased on Dec 8, 2019 - $186600 * 3.636% = $6784.776

Depreciation for building purchased on Aug 15, 2019 - $145500 * 3.636% = $5290.38

Total Depreciation for 2020 = $12075

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