Simmons LLC purchased an office building and land several years ago for $250,000.The purchase price was allocated as follows: $200,000 to the building and $50,000 to the land.The property was placed in service on October 2.If the property is disposed of on February 27 during the 10^th year, calculate Simmons's maximum depreciation in the 10^th year.(Use MACRS Table 5 and Exhibit 10-6.) A)$641. B)$909. C)$5,128. D)$7,346. E)None of the choices are correct.

Question

Quizplus · Accepted Answer

The building is nonresidential real property with a 39-year recovery period under MACRS. Using the mid-month convention, the depreciation for the 10th year is calculated as follows: $200,000 x 2.564% (from MACRS Table 5 for the 10th year) = $5,128. Since the property is disposed of in February, only 1.5 months of depreciation is allowed: $5,128 x (1.5/12) = $641.

Simmons LLC Purchased an Office Building and Land Several Years