Q1. If Bobby were to purchase a building and land for $200,000, with 75% of the purchase
Question:
Q1. If Bobby were to purchase a building and land for $200,000, with 75% of the purchase price being attributable to the building and 25% of the purchase price being attributable to the land.
What would Bobby's first year depreciation deduction be if he placed that building into service in May?
Yr/Mo | 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% |
2-39 | 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 |
Source: IRS Publication 946, How to Depreciate Property
Q.2 If Bobby purchases (and places into service) a new oven for his business in 2018 for $10,000, what is the maximum amount of depreciation he will be able to claim in 2018? Assume that the oven has a seven year useful life and the applicable convention is half-year.
Year/Depreciation Rate | 7-Year Property Half-Year Convention |
---|---|
1 | 14.29% |
2 | 24.49 |
3 | 17.49 |
4 | 12.49 |
5 | 8.93 |
6 | 8.92 |
7 | 8.93 |
8 | 4.46 |
Source: IRS Publication 946, How to Depreciate Property
Financial Accounting
ISBN: 978-0132889711
1st Canadian Edition
Authors: Jeffrey Waybright, Liang Hsuan Chen, Rhonda Pyper