Case Study 11.10
The initial investment on a commercial building was $1M excluding the land. The building was occupied in March of the year in which it was purchased. After 10 years, the property was sold in the 11th year on September 2017 for $2M. The land cost was appraised at $100,000 for tax purposes.
-A. Determine the first year depreciation of the building.
B. What is the depreciation for the year in which the property is disposed?
C. What is the depreciation recapture for this asset?
D. What is the capital gain on this asset?

Question

Quizplus · Accepted Answer

B) 18,190
C) $269,280
D) $900,000
 A) Depreciation in year 1 = 0.02033*(1M) = $20,330
B) Depreciation in year 11 = 0.01819*(1M) = 18,190
C) Depreciation Recapture = [0.02033 + 0.01819 + 9*(0.02564)] * 1M = $269,280
D)Capital Gain = 2M - 1M - 100,000 = $900,000.

Case Study 11.10 The Initial Investment on a Commercial Building Was $1M Excluding