Mike Brady purchased an apartment building on March 12, 2017, for a total of $3
ID: 2552496 • Letter: M
Question
Mike Brady purchased an apartment building on March 12, 2017, for a total of $3 million of which $750,000 was the value of the land on which the apartment building was located. Also, Mike purchased 7-year class new business equipment for $40,000 on November 11, 2017. He elects not to immediately expense the equipment under Section 179 and elects not to take the additional first-year depreciation. Mike purchased no other business assets during 2017.
a. Deteremine Mike's depreciation on the apartment building for 2017.
b. Determine Mike's depreciation on the equipment for 2017.
c. If Mike sells the apartment building on April 29, 2020, how much depreciation deduction will Mike take for the apartment building for 2020?
d. If Mike sells the equipment on December 20, 2018, how much depreciation deduction will Mike take for the equipment for 2018?
Explanation / Answer
a) Dep. On Apartment Building 84375 2.25 mn* 1/20*9/12 b) Dep. On Equipment $40k*1/7*1.5/12 714.29 c) Deduction for 3 years 1 month 2.25 mn* 1/20*3 337500 plus 2.25 mn* 1/20*1/12 9375 Total Deduction 346875 d) Deduction for 1 years 9 month 2.25 mn* 1/20*3 112500 plus 2.25 mn* 1/20*9/12 84375 Total Deduction 196875