Question

on november 27 of year 1, javier purchased a building, including the land it was on, to assemble his new equipment. the total cost of the purchase was $1,379,000; $314,000 was allocated to the basis of the land and the remaining $1,065,000 was allocated to the basis of the building. (use macrs table 1, table 2, table 3, table 4 and table 5.) note: do not round intermediate calculations. round your answers to the nearest whole dollar amount. c. assume the building was purchased and placed in service on october 12 instead of november 27. using macrs, what is javier's depreciation deduction on the building for years 1 through 3?

Answer 1

Javier's depreciation deduction on the building for years 1 through 3 is $38,676, $58,042, and $34,805 respectively.

Step-by-step explanation:

To calculate Javier's depreciation deduction on the building using MACRS, we need to determine the recovery period and depreciation method for the building based on its acquisition date. The recovery periods and depreciation methods can be found in the MACRS tables provided. According to Table 1, the building falls under the 39-year recovery period. For year 1, the depreciation deduction is calculated using the half-year convention.

Assuming the building was purchased and placed in service on October 12 of Year 1, the depreciation deductions for Years 1 through 3 would be:

• Year 1: $1,065,000 x 3.636% = $38,676
• Year 2: $1,065,000 x 5.45% = $58,042
• Year 3: $1,065,000 x 3.273% = $34,805