Question

Carl purchased an apartment complex for $2.8 million on March 17 of year 1. of the purchase price, $1,150,000 was attributable to the land the complex sits on. He also installed new furniture into half of the units at a cost of $77,000. (Use MACRS Table 1. Table 2. Table 3. Table 4 and Table 5.) (Enter your answers in dollars and not in millions of dollars.) Problem 10-52 Parta a. What is Carl's allowable depreciation deduction for his real property for years 1 and 2? (Round your final answers to the neare whole dollar amount.) Depreciation Deduction Year

Answer 1

solution cas value of real property = Total value of the apartment complexa forniture 2800 000 - 1150 000 = 1650 000 The allowable MACRS depreciation on the property of tric for ipar l and year 2 is the appartment complen purchased by r.cart is a residential rental property having a recovery period of straight line 27.5 years . huss use mid-month convention method. Refore table 3 of MARCS 3rd month the rate year & is 2.879%. The rate year 2 is: 3.636% year I - 1650000x 2.879% = 47503.5 year.25 1650000 x 3.636%. = 59994 The allowable MACRs depreciation on the passporty of mr cart is $47503.5 for year 1, and . & 99994 for year 2. .

...b) 1. The allowable MARR's deprecktion on the property of Mr. cars for year 3 if the property is sold on jan 2 of year 3 is, Rue rate for years, under mid-manth convention is 3.636% full year depreciation Cycorr3) = 165000UX 3 6361. $59994 As the property is sold on jans of year 3, under mid-month convention oos months depreciation will be charge. Depreciation for year} = 59994 x 0.5 = 29997 12 $2499.75 allowable MACRs depreciation on the property of Mr. carl for year 3 is $ 2499.7