Cora purchased a hotel building on May 17,2013,for $3,000,000.Determine the cost recovery deduction for 2014.

Question

Quizplus · Accepted Answer

The hotel building is nonresidential real property, which has a recovery period of 39 years. The cost recovery deduction for 2014 is calculated using the straight-line method over 39 years. For the first year, the mid-month convention applies, so the deduction for 2013 is for 7.5 months. For 2014, the full year deduction is $3,000,000 / 39 = $76,920.

Cora Purchased a Hotel Building on May 17,2013,for $3,000,000