On July 2, 2012, Seott purchased a commercial building. The cost basis assingned

Question

On July 2, 2012, Seott purchased a commercial building. The cost basis assingned to the building is $600,000. Seott also owns a residential apartment building he purchased on June 15, 2011 with a cost basis of $400,000. Calculate Seott's total deprecistion deduction for the bulidings for 2012, using the modified Accelerated Cost Recovery Systems. Calculate Seott's total depreciation deduction for the bulidings for 2013, using the modified Accelerated Cost Recovery system. Betty purchases a used $12,000 car in 2012, to use exclusively in her busiess. What will the standard MACRS depreciation schedule be for the first 6 years the auto is depreciated? If Betty holds the car until it is fully depreciated, and uses straight-line depreciation, how many years will this take?

Explanation / Answer

Answer: Date of Purchase – July 2, 2012 Column 7 (july is 7 th month) Row 1 of Table 7.4 MACRS rate is 1.177% MACRS Depreciation for this Building in 2012 = 1.177% * $600,000 = $7062

Date of Purchase – Jun 15, 2011

residential apartment building would have been used for whole year. Row 2 of Table 7.4 MACRS rate of 3.636%

MACRS Depreciation for this Building in 2012 = 3.6360% * $400,000 = $14544

Total Depreciation deduction for 2012=14544+7062=21606

Answer:b Dep for 2013=(600000*2.564%)+(400000*3.636%)=29928

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