Question

On February 8, 2018, Holly purchased a residential apartment building. The cost basis assigned to the building is $209,000. Holly also owns another residential apartment building that she purchased on December 15, 2018, with a cost basis of $588,000.

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 2018 using MACRS.
$

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

$

Calculate the following:

Click here to access the various depreciation tables. If required, round your final answers to the nearest dollar. If your answer is zero, enter "0".

a. The first year of depreciation on a residential rental building costing $200,000 purchased July 2, 2018.
$

b. The second year (2019) of depreciation on a computer costing $5,000 purchased in May 2018, using the half-year convention and accelerated depreciation considering any bonus depreciation taken.
$

c. The first year of depreciation on a computer costing $2,800 purchased in May 2018, using the half-year convention and straight-line depreciation with no bonus depreciation.
$

d. The third year of depreciation on business furniture costing $8,000 purchased in March 2016, using the half-year convention and accelerated depreciation but no bonus depreciation.
$

Answer 1

Answer :-

a. Calculate Holly's total depreciation deduction for the apartments for 2018 using MACRS :-

Given data ,

The cost basis assigned to the building = $209,000

Basis cost = $588,000

Column 8 (February is 2th month) Row 1 of Table 7.4 MACRS rate is 3.182%

Here we need to find out the Total Depreciation on 2018 .

Total Depreciation on 2018 = [ $209,000 * 3.182% ] + [ 3.182% *  $588,000 ]

= $6,650.38 + $18,710.16

= $25,360.54

= $25,360   ( rounded to nearest dollar )

Total Depreciation on 2018 = $25,360

b. Calculate Holly's total depreciation deduction for the apartments for 2019 using MACRS :-

Given data ,

The cost basis assigned to the building = $209,000

Basis cost = $588,000

Both private condo building would have been utilized for entire year. Line 2 of Table 7.4 MACRS rate of 3.636% .

Here we need to find out the Total Depreciation on 2019 .

Total Depreciation on 2019 = [ $209,000 * 3.636% ] + [3.636% *  $588,000 ]

= $7,599.24 + $21,379.68

= $28,978.92

= $28,979  ( rounded to nearest dollar )

Total Depreciation on 2019 = $28,979

a. The first year of depreciation on a residential rental building costing $200,000 purchased July 2, 2018 :-

Given data ,

A residential rental building costing = $200,000

Here we need to find out The first year of depreciation .

The first year of depreciation = $200,000 * 1.970% ( from depreciation table )

= $200,000 * 0.01970

= $3,940

The first year of depreciation = $3,940 .

b. The second year (2019) of depreciation on a computer costing $5,000 purchased in May 2018, using the half-year convention and accelerated depreciation considering any bonus depreciation taken :-

Given data,

Depreciation on a computer costing = $5,000

• Using the half-year convention and accelerated depreciation considering any bonus depreciation taken .

Here we need to find out the Second year depreciation .

Second year depreciation = $5,000 * 50% * 32%    ( from depreciation table )

= $5,000 * 0.50 * 0.32

= $5,000 * 0.16

= $800

Second year depreciation = $800

c. The first year of depreciation on a computer costing $2,800 purchased in May 2018, using the half-year convention and straight-line depreciation with no bonus depreciation :-

Given data ,

Depreciation on a computer costing = $2,800

• Using the half-year convention and straight-line depreciation with no bonus depreciation

Here we need to find out the First year depreciation .

First year depreciation = $2,800 * 10%  ( from depreciation table )

= $2,800 * 0.10

= $280

First year depreciation = $280

d. The third year of depreciation on business furniture costing $8,000 purchased in March 2016, using the half-year convention and accelerated depreciation but no bonus depreciation :-

Given data ,

Depreciation on business furniture costing = $8,000

• Using the half-year convention and accelerated depreciation but no bonus depreciation .

Here we need to find out the Third year depreciation .

Third year depreciation = $8,000 * 17.49%

= $8,000 * 0.1749

= $1,399.2

= $1,399 ( rounded to nearest dollar )

Third year depreciation = $1,399