Bhaskar purchased a new factory building on September 10, 2014, for $3,700,000. Five hundred thousand of the purchase price was allocated to the land. He elected the alternative depreciation system (ADS). Determine the cost recovery deduction for 2015.

Question

Quizplus · Accepted Answer

Under ADS, nonresidential real property is depreciated over 40 years using the straight-line method. The building cost is $3,200,000 ($3,700,000 - $500,000 for land). For 2015, the cost recovery deduction is $80,000 ($3,200,000 / 40 years).

Bhaskar Purchased a New Factory Building on September 10, 2014