Question

using excel show the formulas

Question 5 0/1 pts "You purchased a commercial building and lot for $500,000 on December 15th of 2011. The lot itself was valued at $160,000 when purchased. You sold the lot and building on July 15th of 2018. Use MACRS depreciation and note this property is non-residential real property (39 year life). What is your allowable taxable depreciation amount for year 2018?" ered 8,717.6 swers 4,722 (with margin: 47)

Answer 1

Cost of commercial building	$                            340,000.00
Cost of lot	$                            160,000.00
Total cost of commercial building  and Lot	$                            500,000.00
Useful life of the commercial building =	39
MACRS depreciation rate = 100%/39	2.564%
As the commercial building is sold in July 15, 2018, and as mid month convention is used for the commercial property deprecition rate to be applied for 2018=  2.564% / 12 x 6.5 months	1.39%
Depreciation for the year 2018 is = $340,000 x 1.39%	$                                4,722.22
Parking lot is considered as land improvement and so would be having a 20 year life
Depreciation rate using straight-line depreciation method =100%/20	5%
Following the mid-month convention, depreciation for 2018 = 160000 x 5%/12x *6.5 months	$                                4,333.33
Total allowable tax depreciation amount for year 2018 = (4722.22 + $4,333.33)	$                                9,055.5 6

Cost of commercial building 340000 Cost of lot 160000 8 Total cost of commercial building and Lot Useful life of the commercial building 10 MACRS depreciation rate 100 % / 39 B6+B7 39 - 100 % / 39 As the commercial building is sold in July 15, 2018, and as mid month convention is used for the commercial property deprecition rate to be applied for 2018= 2.564 % / 12 x 6.5 months -B10/12 6.5 11 $340,000 x 1.39 % 12 Depreciation for the year 2018 is -В6"B11 13 Parking lot is considered as land improvement and so would be having a 20 year life 14 Depreciation rate using straight-line depreciation method 100%/20 100 % / 20 - B7 B14 / 12 6.5 15 Following the mid-month convention, depreciation for 2018 160000 x 5%/ 12x *6.5 months 16 Total allowable tax depreciation amount for year 2018 (4722.22 $4,333.33) -В12+B15 17