Cora purchased a hotel building on May 17, 2019, for $3,000,000.Determine the cost recovery deduction for 2020.

Question

Quizplus · Accepted Answer

The cost recovery deduction for real property is calculated using the straight-line method over a period of 39 years.
($3,000,000 / 39 years) = $76,923 per year
However, the deduction for the year of acquisition is prorated based on the number of months the property was owned and placed in service during the year.
May 17, 2019 to December 31, 2019 = 7.72 months
($76,923 x 7.72/12) = $49,073
Therefore, the cost recovery deduction for 2020 is:
$76,923 - $49,073 = $27,850
rounded to the nearest dollar is $27,851, and the closest option is D: $76,920.

Cora Purchased a Hotel Building on May 17, 2019, for $3,000,000.Determine