Bhaskar purchased a new factory building and land on September 10, 2018, for $3,700,000. ($500,000 of the purchase price was allocated to the land.) He elected the alternative depreciation system (ADS). Determine the cost recovery deduction for 2019.
A) $23,328
B) $80,000
C) $82,048
D) $92,500
E) None of the above

Question

Quizplus · Accepted Answer

Under the alternative depreciation system (ADS), nonresidential real property is depreciated over 40 years using the straight-line method. The building cost is $3,200,000 ($3,700,000 - $500,000 for land). For 2019, the second year, the cost recovery deduction is $80,000 ($3,200,000 / 40 years).

Bhaskar Purchased a New Factory Building and Land on September