Question

Simmons LLC purchased an office building and land several years ago for $250,000. The purchase price was allocated as follows: $200,000 to the building and $50,000 to the land. The property was placed in service on October 2. If the property is disposed of on February 27 during the 10th year, calculate Simmons maximum depreciation in the 10th year:a.$641b.$909c.$5,128d.$7,346e.None of these

Answer 1

maximum depreciation = $641

correct option is a $641

Step-by-step explanation:

given data

purchase building price = $200,000

land price = $50000

to find out

Simmons maximum depreciation in the 10th year

solution

we find here first rate by macrs depreciation table for 10 th year is 2.564 %

and we know for non residential property has 39 year recovery period

so 1.5 year The Mid month convention will applies

so

maximum depreciation = building price × 2.54 ×
`(1.5)/(12)`

so maximum depreciation = 200000 × 2.54 ×
`(1.5)/(12)`

maximum depreciation = $641

correct option is a $641