Diane purchased a factory building on April 15,1993,for $5,000,000.She sells the factory building on February 2,2013.Determine the cost recovery deduction for the year of the sale.

Question

Quizplus · Accepted Answer

The factory building is nonresidential real property, which is depreciated over 39 years using the straight-line method. For the year of sale, the cost recovery deduction is prorated based on the number of months the property was held. The building was held for 1 month in 2013, so the deduction is ($5,000,000 / 39 years) * (1/12) = $19,838.

Diane Purchased a Factory Building on April 15,1993,for $5,000,000