Answered: c. The cost recovery for 2021 is _____…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In 2018, José purchased a house for $325,000 ($300,000 relates to the house; $25,000 relates to the land). He used the house as his personal residence. In March 2021, when the fair market value of the house was $400,000, he converted the house to rental property.

a. José's basis for cost recovery for the property is $300,000.

b. Under MACRS, the cost recovery period for residential rental real estate is 27.5 years, and it is subject to the mid-month convention.

c. The cost recovery for 2021 is _____ ?

Please answer C !

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