Which of the following is true about MACRS depreciation? a. Depreciation begins in the middle of...

Which of the following is true about MACRS depreciation?

a. Depreciation begins in the middle of the month in which real property is placed in service.

b. Mid-quarter MACRS is required for all assets if real property is placed in service in the last quarter of the year.

c. Commercial buildings are depreciated over 39 years using an accelerated method.

d. Residential rental buildings are depreciated straight-line over 20 years.

Expert Solution

Answer is C:- Commercial buildings are depreciated over 39 years using an accelerated method

The modified accelerated cost recovery system (MACRS) is a depreciation system used for tax purposes in the U.S. MACRS depreciation allows the capitalized cost of an asset to be recovered over a specified period via annual deductions. The MACRS system puts fixed assets into classes that have set depreciation periods

The modified accelerated cost recovery system (MACRS) allows a business to recover the cost basis of certain assets that deteriorate over time.
The IRS provides guidelines on which assets are eligible for MACRS and what useful life figure should be used.
MACRS allows for faster depreciation in the first years of an asset's life and slows depreciation later on. This is beneficial to businesses from a tax perspective.

As per the guidelines provided by IRS, rate of depreciation of commercial building is as follows:-

An office building, store, or warehouse that is not residential property or has a class life of less than 27.5 years

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ekkarill92 answered 1 year ago

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