Homework Answers
The cost recovery deduction for 2018 is,
- The warehouse adjusted basis cost net of land cost is $305,000
- The warehouse will be classified as non-residential real property class
- The straight-line method is used and the number of useful life is assumed as 39 years
- The mid-month convention is used and the warehouse is purchased on February 25, 2011, it will be considered in service for 10.5 months ( 0.5 months in Feb., and 10 from March to December )
- Therefore coat recovery comes to adjusted basis of warehouse * (1/39) * (months in service/months in year) = 305000 * (1/39) * (10.5/12) = 6,853.
Therefore the answer is 6,853.
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