On August 8, 2013, Holly purchased a residential apartment building. The cost basis assigned to the building is $800,000. Holly also owns another residential apartment building that she purchased on June 15, 2013, with a cost basis of $500,000.

a. Calculate Holly's total depreciation deduction for the apartments for 2013 using MACRS.

b. Calculate Holly's total depreciation deduction for the apartments for 2014 using

Question

Business

Jimmy Chaney

25 August, 13:46

On August 8, 2013, Holly purchased a residential apartment building. The cost basis assigned to the building is $800,000. Holly also owns another residential apartment building that she purchased on June 15, 2013, with a cost basis of $500,000.

a. Calculate Holly's total depreciation deduction for the apartments for 2013 using MACRS.

b. Calculate Holly's total depreciation deduction for the apartments for 2014 using

+2

Answers (1)

Know the Answer?

Brock Doyle · Answer 1

a. $20,762

b. $47,268

Explanation:

a. 2013

First Building

Date of Purchase = Aug 8, 2013

Using Column 8 as Aug is 8th month of the year and Row 1 as it is first year after purchase from MACRS Table

MACRS rate = 1.364%

Depreciation for Building in 2013 = 1.364% * $800,000 = $10,912

Second Building

Date of Purchase - Jun 15, 2013

Using Column 6 as Jun is 6th month of the year and Row 1 as it is first year after purchase from MACRS Table

MACRS rate = 1.970%

Depreciation for Building in 2013 = 1.970% * $500,000 = $9,850

Total

Total Depreciation for the year 2014 = $10,912 + $9,850 = $20,762

b. 2014

Total cost of Building = $800,000 + $500,000 = 1,300,000

Total Depreciation for the year 2014 = $1,300,000 x 3.636%

Total Depreciation for the year 2014 = $47,268