Question

An acre lot was purchased for $100,000. A $500,000 office building was erected. The building is placed in service in May. Find the MACRS depreciation charge for year 1.

A. $8,025
B. $4,8615
C. $9,630
D. $12,820

Answer 1

Answer: $8025

Step-by-step explanation:

From the information given, first and foremost, we need to realise that only the building in this case will be depreciated due to the fact that land is considered to be a non depreciable asset.

Therefore, the MACRS depreciation charge for year 1 will then be:

= MACRS rate × Value of Building

= 1.605% × $500,000

= 0.01605 × $500,000

= $8025