Problem 8-4 (Algorithmic) Modified Accelerated Cost Recovery System (MACRS) (LO 8.2)

On May 8, 2020, Holly purchased a residential apartment building. The cost basis assigned to the building is $263,000. Holly also owns another residential apartment building that she purchased on August 15, 2020, with a cost basis of $145,500.

Click here to access the depreciation tables.

Click here to access the depreciation tables.

If required, round intermediate calculations and final answers to nearest dollar.

a. Calculate Holly's total depreciation deduction for the apartments for 2020 using MACRS. $_____

b. Calculate Holly's total depreciation deduction for the apartments for 2021 using MACRS. $_____

DEPRECIATION TABLE

TABLE 8.5

Straight-Line Depreciation for Real Property Assuming Mid-Month Convention*

27.5-Year Residential Real Property

The applicable annual percentage is (use the column for the month in the first year the property is placed in service):

Recovery
Year(s)		1		2		3		4		5		6		7		8		9		10		11		12
1		3.485		3.182		2.879		2.576		2.273		1.970		1.667		1.364		1.061		0.758		0.455		0.152
218		3.636		3.636		3.636		3.636		3.636		3.636		3.636		3.636		3.636		3.636		3.636		3.636
1927		3.637		3.637		3.637		3.637		3.637		3.637		3.637		3.637		3.637		3.637		3.637		3.637
28		1.970		2.273		2.576		2.879		3.182		3.485		3.636		3.636		3.636		3.636		3.636		3.636
29		0.000		0.000		0.000		0.000		0.000		0.000		0.152		0.455		0.758		1.061		1.364		1.667

39-Year Nonresidential Real Property
The applicable annual percentage is (use the column for the month in the first year the property is placed in service):
Recovery Year(s)		1		2		3		4		5		6		7		8		9		10		11		12
1		2.461		2.247		2.033		1.819		1.605		1.391		1.177		0.963		0.749		0.535		0.321		0.107
239		2.564		2.564		2.564		2.564		2.564		2.564		2.564		2.564		2.564		2.564		2.564		2.564
40		0.107		0.321		0.535		0.749		0.963		1.177		1.391		1.605		1.819		2.033		2.247		2.461