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 10^th year, calculate Simmons' maximum depreciation in the 10^th year: A) $641 B) $909 C) $5,128 D)$7,346 E)None of these

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Quizplus · Accepted Answer

The building is depreciated over 39 years using the straight-line method. In the 10th year, only a portion of the year is used for depreciation (1.5 months out of 12), so the calculation is: ($200,000 / 39 years) * (1.5/12) = $641.

Simmons LLC Purchased an Office Building and Land Several Years