Question

On July 8, 2019, Holly purchased a residential apartment building. The cost basis assigned to the building is $243,700. Holly also owns another residential apartment building that she purchased on July 15, 2019, with a cost basis of $420,000.

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.

Answer 1

Solution:a

Apartment - 1 purchased of cost= $ 2,43,700

Date of purchase = July 8 2019

Years as per MACRS = 27.5 years

Apartment - 2 purchased of cost= $ 4,20,000

Date of purchase = July 15 2019

Calculation of depreciation for 2019

Depreciation for 2019-

For apartment 1 = 2,43,700 / 27.5 * 177 / 365 = $ 4,297

For apartment 2 = 4,20,000 / 27.5 * 170 / 365 = $ 7,713

Total for 2019 = $ 11,410

Solution: b

For apartment 1 = 2,43,700 / 27.5 = $ 8,862

For apartment 2 = 4,20,000 / 27.5 = $ 15,273

Total for 2020 = $ 24,135