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 10ᵗʰ year, calculate Simmons' maximum depreciation in the 10ᵗʰ year. (Use MACRS Table 5) EXHIBIT 10-6
A) $641.
B) $909.
C) $5,128.
D) $7,346.
E) None of the choices are correct.

Question

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 10ᵗʰ year, calculate Simmons' maximum depreciation in the 10ᵗʰ year. (Use MACRS Table 5)  EXHIBIT 10-6
A) $641.
B) $909.
C) $5,128.
D) $7,346.
E) None of the choices are correct.

Quizplus · Accepted Answer

The mid-month convention applies. Non-residential property has a 39-year recovery period. The depreciation is $641 ($200,000 × 2.564% × 1.5/12).

Simmons LLC Purchased an Office Building and Land Several Years