Diane purchased a factory building on November 15,1993,for $5,000,000.She sells the factory building on February 2,2010.Determine the cost recovery deduction for the year of the sale.
A)$16,025.
B)$19,844.
C)$26,458.
D)$158,750.
E)None of the above.

Question

Quizplus · Accepted Answer

The cost recovery deduction for the year of the sale is $16,025. This is calculated by taking the adjusted basis of the property ($5,000,000) and dividing it by the recovery period (39 years). The resulting number is then multiplied by the number of months in the year of the sale (2).

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