Question

In April 2019, Lenape Corporation completed security, fire and heating system improvements to existing nonresidential real property with a total cost of $1,275,000. assuming this improvements are 39-year recovery property and qulify under section 179 deduction, calculate Lenape's total cost recovery on the improvements for 2019. using table 7.4

In April 2019, Lenape Corporation completed security, fire, and heating system improvements to existing nonresidential real property with a total cost of $1,275,000. Assuming these improvements are 39-year recovery property and qualify for the Section 179 deduction, calculate Lenape's total cost recovery on the improvements for 2019. Use Table 7-4. (Round your intermediate calculations to the nearest whole dollar amount. Enter the MACRS percentage in decimals. (i.e.12.34 should be entered as 0.1234).) $ 1,275,000 Total cost of qualifying improvements Section 179 election/2019 dollar amount Tax basis recoverable through MACRS First-year MACRS percentage First-year MACRS depreciation $ 1,275,000 $ 0 Total cost recovery

Answer 1

Calculation of Lenape's total cost recovery on the improvements for 2019:

Total cost of qualifying improvements $1,275,000

Section 179 election/2019 dollar amount (1,020,000)

Tax basis recoverable through MACRS $255,000

First-year MACRS percentage (39-year, month 4) .01819

First-year MACRS depreciation $ 4,638

Total deduction ($1,020,000 + 4,638) $1,024,638

These building improvements qualify for the Section 179 deduction, but are not eligible for bonus depreciation.