Lopez acquired a building on June 1, 2015, for $8,284,900. Compute the depreciation deduction assuming the...
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Lopez acquired a building on June 1, 2015, for $8,284,900. Compute the depreciation deduction assuming the building is classified as (a) residential and (b) non residential. Click here to access the depreciation table to use for this problem. If required, round your answers to the nearest dollar. a. Calculate Lopez's cost recovery deduction for 2020 if the building is classified as residential rental real estate. $ b. Calculate Lopez's cost recovery deduction for 2020 if the building is classified as nonresidential real estate. Exhibit 5.5 For Property Placed in Service after December 31, 1986 (Partial Table * ) 3-Year Recovery Year First Quarter Second Quarter Third Quarter Fourth Quarter 58.33 27.78 1 2 MACRS Accelerated Depreciation for Personal Property Assuming Mid-Quarter Convention (Percentage Rates) Recovery Year 1 2 Recovery Year 1 2 First Quarter 35.00 26.00 First Quarter 25.00 21.43 41.67 38.89 5-Year Second Quarter 25.00 30.00 7-Year Second Quarter 17.85 23.47 25.00 50.00 Third Quarter 15.00 34.00 Third Quarter 10.71 25.51 8.33 61.11 Fourth Quarter 5.00 38.00 Fourth Quarter 3.57 27.55 Exhibit 5.6 MACRS Straight-Line Depreciation for Real Property Assuming Mid-Month Convention* For Property Placed in Service after December 31, 1986: 27.5-Year Residential Real Property Recovery Year(s) 1 2-18 19-27 28 29 Recovery Year(s) 1 2-19 20-31 32 33 6 8 10 11 12 For Property Placed in Service after December 31, 1986, and before May 13, 1993: 31.5-Year Nonresidential Real Property The Applicable Percentage Is (Use the Column for the Month in the First Year the Property Is Placed in Service): 1 2 3 4 7 3.042 2.778 2.513 2.249 3.175 3.175 3.175 3.175 3.174 3.174 3.174 3.174 1.720 0.000 5 9 1.984 1.720 1.455 1.190 0.926 3.175 3.175 3.175 3.175 3.175 3.174 3.174 3.174 3.174 3.174 2.778 3.042 3.175 3.175 3.175 0.000 0.000 0.132 0.397 1.984 2.249 2.513 0.000 0.000 0.000 0.661 The Applicable Percentage Is (Use the Column for the Month in the First Year the Property Is Placed in Service): 1 2 3 4 5 6 8 9 10 11 12 7 3.182 2.879 2.576 2.273 1.970 1.667 1.364 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.637 3.637 2.273 2.576 2.879 3.182 3.485 3.636 3.636 3.636 0.000 0.000 0.000 0.000 0.000 0.152 0.455 0.758 1.061 0.758 3.636 3.636 3.637 3.637 3.637 Recovery Year(s) 3.485 3.636 3.637 1.970 0.000 For Property Placed in Service after May 12, 1993: 39-Year Nonresidential Real Property 1 2-39 40 0.152 3.636 3.637 3.636 3.636 3.636 1.061 1.364 1.667 0.455 3.636 2.461 2.564 0.107 0.661 3.175 3.174 3.174 3.175 3.175 0.926 1.190 0.397 3.175 0.963 0.749 0.535 2.564 2.564 2.564 1.605 1.819 5 8 9 10 11 12 The Applicable Percentage Is (Use the Column for the Month in the First Year the Property Is Placed in Service): 1 2 3 4 6 7 2.247 2.033 1.819 1.605 1.391 1.177 2.564 2.564 2.564 2.564 2.564 2.564 0.321 0.535 0.749 0.963 1.177 1.391 0.321 2.564 2.033 2.247 0.132 3.175 3.174 3.175 1.455 0.107 2.564 2.461 + *The official tables contain a separate row for each year. For ease of presentation, certain years are grouped in these tables. In some instances, this will produce a difference of 0.001 for the last digit when compared with the official tables. Exhibit 5.7 MACRS Straight-Line Depreciation for Personal Property and Qualified Improvement Property Assuming Half-Year Convention * For Property Placed in Service after December 31, 1986 MACRS Class % First Recovery Year 16.67 10.00 7.14 5.00 3.33 2.50 Other Recovery Years Years % 2-3 2-5 2-7 2-10 2-15 3-year 5-year 7-year 10-year 15-year 20-year Note: The last two rows are used for qualified improvement property (15-year normal MACRS; 20-year ADS). 33.33 2-20 20.00 14.29 10.00 Last Recovery Year Year % 6.67 5.00 4 6 8 11 16 21 16.67 10.00 7.14 5.00 3.33 2.50 Exhibit 5.8 ADS for Alternative Minimum Tax: 150% Declining-Balance for Personal Property Assuming Half-Year Convention (Percentage Rates) For Property Placed in Service after December 31, 1986 (Partial Table*) 5-Year 9.5-Year 150% 150% Recovery Year 1 2 495 AWN 3 4 6 8 9 10 11 12 13 3-Year 150% 25.00 37.50 25.00** 12.50 15.00 25.50 17.85 16.66** 16.66 8.33 7-Year 150% 10.71 19.13 15.03 12.25** 12.25 12.25 12.25 6.13 7.89 14.54 12.25 10.31 9.17** 9.17 9.17 9.17 9.17 9.16 10-Year 150% 7.50 13.88 11.79 10.02 8.74** 8.74 8.74 8.74 8.74 8.74 4.37 12-Year 150% 6.25 11.72 10.25 8.97 7.85 7.33*** 7.33 7.33 7.33 7.33 7.32 7.33 3.66 * The figures in this table are taken from the official table that appears in Rev.Proc. 87-57, 1987-2 C.B. 687. Because of its length, the complete table is not presented. **Switchover to straight-line depreciation. Exhibit 5.10 ADS Straight-Line for Real Property Assuming Mid-Month Convention (Percentage Rates) For Property Placed in Service after December 31, 2017; 30-Year Residential Rental Property Month Placed in Service 6 7 1.806 1.528 3.333 3.333 1.528 1.806 2.083 Recovery Year 1 2-30 31 Recovery Year 1 3 4 2 3.194 2.917 3.333 3.333 0.139 0.417 0.694 0.972 1.250 5 2.639 2.361 2.083 3.333 3.333 3.333 For Property Placed in Service after December 31, 1986; 40-Year Nonresidential Real Property* 1 5 2 3 2.396 2.188 1.979 2.500 2.500 2.500 4 1.771 1.563 2.500 2.500 Month Placed in Service 7 1.146 2.500 6 1.354 2.500 0.104 0.312 0.521 0.729 0.937 1.146 1.354 1.562 1 2-40 41 8 9 1.250 0.972 3.333 3.333 3.333 2.361 2.639 9 8 0.938 2.500 2.500 0.729 1.771 10 11 12 0.694 0.417 0.139 3.333 2.917 3.333 3.194 * Also used for residential rental property placed in service before 2018. 10 0,521 2.500 1.979 12 11 0.313 0.104 2.500 2.500 2.187 2.396 + Lopez acquired a building on June 1, 2015, for $8,284,900. Compute the depreciation deduction assuming the building is classified as (a) residential and (b) non residential. Click here to access the depreciation table to use for this problem. If required, round your answers to the nearest dollar. a. Calculate Lopez's cost recovery deduction for 2020 if the building is classified as residential rental real estate. $ b. Calculate Lopez's cost recovery deduction for 2020 if the building is classified as nonresidential real estate. Exhibit 5.5 For Property Placed in Service after December 31, 1986 (Partial Table * ) 3-Year Recovery Year First Quarter Second Quarter Third Quarter Fourth Quarter 58.33 27.78 1 2 MACRS Accelerated Depreciation for Personal Property Assuming Mid-Quarter Convention (Percentage Rates) Recovery Year 1 2 Recovery Year 1 2 First Quarter 35.00 26.00 First Quarter 25.00 21.43 41.67 38.89 5-Year Second Quarter 25.00 30.00 7-Year Second Quarter 17.85 23.47 25.00 50.00 Third Quarter 15.00 34.00 Third Quarter 10.71 25.51 8.33 61.11 Fourth Quarter 5.00 38.00 Fourth Quarter 3.57 27.55 Exhibit 5.6 MACRS Straight-Line Depreciation for Real Property Assuming Mid-Month Convention* For Property Placed in Service after December 31, 1986: 27.5-Year Residential Real Property Recovery Year(s) 1 2-18 19-27 28 29 Recovery Year(s) 1 2-19 20-31 32 33 6 8 10 11 12 For Property Placed in Service after December 31, 1986, and before May 13, 1993: 31.5-Year Nonresidential Real Property The Applicable Percentage Is (Use the Column for the Month in the First Year the Property Is Placed in Service): 1 2 3 4 7 3.042 2.778 2.513 2.249 3.175 3.175 3.175 3.175 3.174 3.174 3.174 3.174 1.720 0.000 5 9 1.984 1.720 1.455 1.190 0.926 3.175 3.175 3.175 3.175 3.175 3.174 3.174 3.174 3.174 3.174 2.778 3.042 3.175 3.175 3.175 0.000 0.000 0.132 0.397 1.984 2.249 2.513 0.000 0.000 0.000 0.661 The Applicable Percentage Is (Use the Column for the Month in the First Year the Property Is Placed in Service): 1 2 3 4 5 6 8 9 10 11 12 7 3.182 2.879 2.576 2.273 1.970 1.667 1.364 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.637 3.637 2.273 2.576 2.879 3.182 3.485 3.636 3.636 3.636 0.000 0.000 0.000 0.000 0.000 0.152 0.455 0.758 1.061 0.758 3.636 3.636 3.637 3.637 3.637 Recovery Year(s) 3.485 3.636 3.637 1.970 0.000 For Property Placed in Service after May 12, 1993: 39-Year Nonresidential Real Property 1 2-39 40 0.152 3.636 3.637 3.636 3.636 3.636 1.061 1.364 1.667 0.455 3.636 2.461 2.564 0.107 0.661 3.175 3.174 3.174 3.175 3.175 0.926 1.190 0.397 3.175 0.963 0.749 0.535 2.564 2.564 2.564 1.605 1.819 5 8 9 10 11 12 The Applicable Percentage Is (Use the Column for the Month in the First Year the Property Is Placed in Service): 1 2 3 4 6 7 2.247 2.033 1.819 1.605 1.391 1.177 2.564 2.564 2.564 2.564 2.564 2.564 0.321 0.535 0.749 0.963 1.177 1.391 0.321 2.564 2.033 2.247 0.132 3.175 3.174 3.175 1.455 0.107 2.564 2.461 + *The official tables contain a separate row for each year. For ease of presentation, certain years are grouped in these tables. In some instances, this will produce a difference of 0.001 for the last digit when compared with the official tables. Exhibit 5.7 MACRS Straight-Line Depreciation for Personal Property and Qualified Improvement Property Assuming Half-Year Convention * For Property Placed in Service after December 31, 1986 MACRS Class % First Recovery Year 16.67 10.00 7.14 5.00 3.33 2.50 Other Recovery Years Years % 2-3 2-5 2-7 2-10 2-15 3-year 5-year 7-year 10-year 15-year 20-year Note: The last two rows are used for qualified improvement property (15-year normal MACRS; 20-year ADS). 33.33 2-20 20.00 14.29 10.00 Last Recovery Year Year % 6.67 5.00 4 6 8 11 16 21 16.67 10.00 7.14 5.00 3.33 2.50 Exhibit 5.8 ADS for Alternative Minimum Tax: 150% Declining-Balance for Personal Property Assuming Half-Year Convention (Percentage Rates) For Property Placed in Service after December 31, 1986 (Partial Table*) 5-Year 9.5-Year 150% 150% Recovery Year 1 2 495 AWN 3 4 6 8 9 10 11 12 13 3-Year 150% 25.00 37.50 25.00** 12.50 15.00 25.50 17.85 16.66** 16.66 8.33 7-Year 150% 10.71 19.13 15.03 12.25** 12.25 12.25 12.25 6.13 7.89 14.54 12.25 10.31 9.17** 9.17 9.17 9.17 9.17 9.16 10-Year 150% 7.50 13.88 11.79 10.02 8.74** 8.74 8.74 8.74 8.74 8.74 4.37 12-Year 150% 6.25 11.72 10.25 8.97 7.85 7.33*** 7.33 7.33 7.33 7.33 7.32 7.33 3.66 * The figures in this table are taken from the official table that appears in Rev.Proc. 87-57, 1987-2 C.B. 687. Because of its length, the complete table is not presented. **Switchover to straight-line depreciation. Exhibit 5.10 ADS Straight-Line for Real Property Assuming Mid-Month Convention (Percentage Rates) For Property Placed in Service after December 31, 2017; 30-Year Residential Rental Property Month Placed in Service 6 7 1.806 1.528 3.333 3.333 1.528 1.806 2.083 Recovery Year 1 2-30 31 Recovery Year 1 3 4 2 3.194 2.917 3.333 3.333 0.139 0.417 0.694 0.972 1.250 5 2.639 2.361 2.083 3.333 3.333 3.333 For Property Placed in Service after December 31, 1986; 40-Year Nonresidential Real Property* 1 5 2 3 2.396 2.188 1.979 2.500 2.500 2.500 4 1.771 1.563 2.500 2.500 Month Placed in Service 7 1.146 2.500 6 1.354 2.500 0.104 0.312 0.521 0.729 0.937 1.146 1.354 1.562 1 2-40 41 8 9 1.250 0.972 3.333 3.333 3.333 2.361 2.639 9 8 0.938 2.500 2.500 0.729 1.771 10 11 12 0.694 0.417 0.139 3.333 2.917 3.333 3.194 * Also used for residential rental property placed in service before 2018. 10 0,521 2.500 1.979 12 11 0.313 0.104 2.500 2.500 2.187 2.396 +
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