Diane purchased a factory building on April 15, 1993, for $5,000,000. She sells the factory building on February 2, 2017. Determine the cost recovery deduction for the year of the sale.
A)$16,025
B)$19,838
C)$26,458
D)$158,750
E)None of the above

Question

Quizplus · Accepted Answer

The cost recovery deduction for the year of sale is calculated using the mid-month convention for real property. The factory building is nonresidential real property with a 39-year recovery period. The deduction is calculated for the portion of the year up to the sale date. For 2017, the deduction is $5,000,000 / 39 years * 1.5/12 months = $19,838.

Diane Purchased a Factory Building on April 15, 1993, for $5,000,000