Question

On September 3, 2015, Ivory Company acquired an apartment building for $1,500,000 (with $300,000 being allocated to the land). The straight-line cost recovery method was used. The property was sold on September 30, 2018, for $1,400,000.

Click here to access the Exhibit for MACRS Straight-Line Depreciation for Real Property.

If an amount is zero, enter "0". Round the total cost recovery deduction to the nearest dollar.

a. The cost recovery is $________, and the adjusted basis for the building is $________.

b. There is $______ of recognized (gain/loss) on the sale of the property. How much, if any, is subject to § 1250 recapture?
$_________

Answer 1

Year	Remaining recovery	Adjusted Base	Depreciation	Accumulated depecation	Method
2015	39	120,000.00	3,076.80	3,076.80	200% DB
2016	38.5	116,923.20	5,995.82	9,072.62	200% DB
2017	37.5	110,927.38	5,688.36	14,760.98	200% DB
2018	36.5	105,239.02	5,396.66	20,157.64	200% DB
2019	35.5	99,842.36	5,119.92	25,277.56	200% DB
A)
Recovery on 30th of sep 2018 is 99,842
Adjusted basis is 99842+land amount of $30000=$129842
B)
Sold for $140000 I,e gain =($140000-$129842)=$10158
If recapture is $1250 then gain is $10158+$1250=$11408