Question

How to calclate depreciation for tax purposes: Assume you have a building with a purchasing date...

How to calclate depreciation for tax purposes:

Assume you have a building with a purchasing date of 20th of Oct and a recovery period of 39 years. What is the depreciation rate using a Macrs table?


Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Mid month convention will be used for depreciating the building. Using MACRS table for mid month convention for 39 year old property:

Depreciation rate for October (year 1) = 0.535%

Depreciation rate for November (year 1) = 0.321%

Depreciation rate for December (year 1) = 0.107%

Depreciation rates will be used from the table below:

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You are going to have to make a depreciation schedule to be used for tax purposes...
You are going to have to make a depreciation schedule to be used for tax purposes for the following description: A company purchased a barge costing $671,000 in May 2016 and placed it in service. The total amount of MACRS properties the company placed in service during the last three months of 2016 were 50% of the total amount of all MACRS properties the company placed in service during 2016. What is the second year (2017) book value? (Answer with...
How would you compare the MACRS method for personal property to non-tax financial depreciation? Describe the...
How would you compare the MACRS method for personal property to non-tax financial depreciation? Describe the MACRS system for personal property in terms of both (1) Recovery Period and (2) Depreciation method used. Why is MACRS less "realistic"? Also, why does the tax law allow taxpayers to use this special method?
2019 Modified Accelerated Cost Recovery System (MACRS) (LO 8.2) On March 8, 2019, Holly purchased a...
2019 Modified Accelerated Cost Recovery System (MACRS) (LO 8.2) On March 8, 2019, Holly purchased a residential apartment building. The cost basis assigned to the building is $700,000. Holly also owns another residential apartment building that she purchased on October 15, 2019, with a cost basis of $400,000. Please access the depreciation tables. a. Calculate Holly's total depreciation deduction for the apartments for 2019 using MACRS. $ ________ Feedback MACRS allows taxpayers who invest in capital assets to write off...
Your firm is considering a project that would require purchasing  $7.9 million worth of new equipment. Determine...
Your firm is considering a project that would require purchasing  $7.9 million worth of new equipment. Determine the present value of the depreciation tax shield associated with this equipment if the​ firm's tax rate is  20% using the MACRS depreciation with a​ five-year recovery period and starting immediately. Note that because the depreciation tax shield is essentially a riskless cash flow​ (assuming the​ firm's tax rate remains​ constant), the appropriate cost of capital to evaluate the tax benefit from depreciation is the​...
A new distribution center requires an initial investment of $32 million. But for capital budgeting purposes,...
A new distribution center requires an initial investment of $32 million. But for capital budgeting purposes, financial analysts believe the facility would have a market value of about $25 million at the end of a five-year planning period. The company's tax rate is 32.0%, and depreciation is determined using the MACRS factors for 7 years. (See the table below). What is the projected cash flow from salvage for the end of the five-year planning period?
Bob, Joe, Sam, and Cassie operate an equal partnership. Joe contributed a building (basis of $75,000...
Bob, Joe, Sam, and Cassie operate an equal partnership. Joe contributed a building (basis of $75,000 and FMV $100,000) at the time of contribution and has held it as a capital asset prior to the contribution. The building was depreciated by the partnership for tax purposes using the straight-line method at a rate of $1,923 per year with a life of 39 years. After five years worth of depreciation had been allowed with respect to the building and at a...
On December 15 of year 1 Javier purchased a building, including the land it was on,...
On December 15 of year 1 Javier purchased a building, including the land it was on, to assemble his new equipment. The total cost of the purchase was $1,432,000; $317,000 was allocated to the basis of the land and the remaining $1,115,000 was allocated to the basis of the building. (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) b. What would...
Please explain what you did Splat Candies is planning on building a new gumball factory that...
Please explain what you did Splat Candies is planning on building a new gumball factory that will have an estimated construction cost of $44 million. One-quarter of the cost of construction will be spent in the first year, with the remainder spent in the second year. During the third year (first year of operation), the gumminess of the gumballs slows down production so that profit of only $8 million is achieved. After that, the net yearly profit is $12 million...
The Loore-Payne Medical Clinic will be purchasing a new computer network for the office. The equipment...
The Loore-Payne Medical Clinic will be purchasing a new computer network for the office. The equipment will cost $30000 to purchase and $20000 to install and check out. The equipment will last 9 years and is expected to have a salvage value of $1000 at that time. The equipment is depreciated using MACRS with a 5 year recovery period. Find the depreciation and book value each year for this equipment. Use Excel.
Your firm is considering a project that would require purchasing $7.9 million worth of new equipment....
Your firm is considering a project that would require purchasing $7.9 million worth of new equipment. Determine the present value of the depreciation tax shield associated with this equipment if the? firm's tax rate is 33%?, the appropriate cost of capital is 8 %?, and the equipment can be? depreciated: a.? Straight-line over a? ten-year period, with the first deduction starting in one year. b.? Straight-line over a? five-year period, with the first deduction starting in one year. c. Using...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT