Diane purchased a factory building on April 15, 1994, for $5,000,000. She sells the factory building on February 2, 2014. Determine the cost recovery deduction for the year of the sale.

Question

Quizplus · Accepted Answer

The factory building is nonresidential real property with a 39-year recovery period. The cost recovery deduction for the year of sale is calculated using the mid-month convention. The building was held for 1 month in 2014, so the deduction is $5,000,000 / 39 years * 1/12 month = $19,838.

Diane Purchased a Factory Building on April 15, 1994, for $5,000,000