Reg 2: MODULE 3: COST RECOVERY

Question 1

On August 1, year 1, Gray purchased and placed into service and office building costing $264k, including $30k for the land. What was Gray’s MACRS deduction for office bldg. In year 1?

Answer 1

Only the bldg is depreciated. The MACRS rules provide a 39 year life, straight line depreciation and a mid-month acquisition convention that treats property as acquired in the middle of the month no matter when it was acquired.

$2,250[$234k/39 years]×(4.5 months/months)=$2,250