Doug purchased a new factory building on January 15,1990,for $400,000.On March 1,2015,the building was sold.Determine the cost recovery deduction for the year of the sale;Doug did not use the MACRS straight-line method.
A)$0
B)$1,587
C)$2,645
D)$12,696
E)None of the above

Question

Quizplus · Accepted Answer

Since Doug did not use the MACRS straight-line method, the building would have been depreciated using the MACRS 39-year straight-line method for nonresidential real property. The building was held for 2 months in 2015, so the cost recovery deduction is calculated as $400,000 / 39 years * 2.5% (half-year convention) = $2,645.

Doug Purchased a New Factory Building on January 15,1990,for $400,000