On June 1, 2011, Skylark Enterprises (not a corporation) acquired a retail store

Question

On June 1, 2011, Skylark Enterprises (not a corporation) acquired a retail store building for $500,000 (with $100,000 being allocated to the land). The store building was 39-year real property, and the straight-line cost recovery method was used. The property was sold on June 21, 2015, for $385,000.

Click here to access EXHIBIT 8.9 MACRS Straight-Line Depreciation for Real Property.

Carry all cost recovery rates out to five decimal places. 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 loss  on the sale of the property, of which none is subject to § 1250 recapture.

Explanation / Answer

building acquired for $500,000

Value of land = 100000

Value of building excluding land = 400000

percentage = 2.564 %

Expense = 10256

The cost recovery is $ 10256 and the adjusted basis for the building is $ 374744

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