Question

On 6/14/2013, Jack paid $105000 for a property. On 8/2/2015, he sold the property. Compute the MACRS depreciation. He used this property in his company during this time period.

Note: recovery period is 20 years.

Note: Find the depreciation (in dollars) for each year from 2013 to 2015, separately.

SHOW CALCULATION

Answer 1

Based on the information available in the question, we can summarize as follows:-

Purchase price of the property - $105,000

Date of purchase - 06/14/2013

Date of sale - 08/02/15

The property will be depreciated using the MACRS Half year convention for a 20 year cost recovery period.

Depreciation expense for 2013:-

=$105,000 * 3.750%

=$3,937.5

=$3,938(Rounded)

Depreciation expense for 2014:-

=$105,000 * 7.219%

=$7,579.95

=$7,580(Rounded)

Depreciation expense for 2015:-

=$105,000 * 6.677% * 1/2

=$3,505.425

=$3,505(Rounded)

We can summarize as follows:-

Year	Depreciation expense
2,013	3,938
2,014	7,580
2,015	3,505

Please note that since the asset is sold during 2015, per IRS, the depreciation expense for the year, would be one half of the actual depreciation expense for the year.

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