Wolfgang, a calendar-year taxpayer, purchased a $100,000 piece of residential rental realty in April of year 1.
a. What is Wolfgang's MACRS depreciation deduction in years 1 and 2?
b. What is his depreciation deduction in year 20 if he disposes of the asset in August of that year?
c. How would your answers change to (a) and (b) if the property is nonresidential realty?

Question

Quizplus · Accepted Answer

The Answer is a. Year 1: $100,000 x .02576 = $2,576; Year 2: $100,000 x .03636 = $3,636
b. Year 20: $100,000 x .03637 x (7.5/12) = $2,273
c. Year 1: $100,000 x .01819 = $1,819; Year 2 = $100,000 x .02564 = $2,564
Year 20: $100,000 x .02564 x (7.5/12) = $1,603

Wolfgang, a Calendar-Year Taxpayer, Purchased a $100,000 Piece of Residential