Bhaskar purchased a new factory building on September 10,2013,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 2014.

Question

Quizplus · Accepted Answer

Under ADS, nonresidential real property is depreciated over 40 years using the straight-line method. The depreciable basis is $3,200,000 ($3,700,000 - $500,000 for land). For 2014, the cost recovery deduction is $3,200,000 / 40 = $80,000.

Bhaskar Purchased a New Factory Building on September 10,2013,for $3,700,000