Exercise 8-21 (LO. 2) Lopez acquired a building on June 1, 2015, for $1,000,000. Compute the depreciation deduction assuming the building is classified as (a) residential and (b) non residential. Click here to access the depreciation table to use for this problem. If required, round your answers to the nearest dollar. a. Calculate Lopez's cost recovery deduction for 2020 if the building is classified as residential rental real estate. b. Calculate Lopez's cost recovery deduction for 2020 if the building is classified as nonresidential real estate.
Exercise 8-21 (LO. 2) Lopez acquired a building on June 1, 2015, for $1,000,000. Compute the depreciation deduction assuming the building is classified as (a) residential and (b) non residential. Click here to access the depreciation table to use for this problem. If required, round your answers to the nearest dollar. a. Calculate Lopez's cost recovery deduction for 2020 if the building is classified as residential rental real estate. b. Calculate Lopez's cost recovery deduction for 2020 if the building is classified as nonresidential real estate.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Exercise 8-21 (LO. 2)
Lopez acquired a building on June 1, 2015, for $1,000,000. Compute the depreciation deduction assuming the building is classified as (a)
residential and (b) non residential.
Click here to access the depreciation table to use for this problem.
If required, round your answers to the nearest dollar.
a. Calculate Lopez's cost recovery deduction for 2020 if the building is classified as residential rental real estate.
b. Calculate Lopez's cost recovery deduction for 2020 if the building is classified as nonresidential real estate.
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Transcribed Image Text:mibit 8.8 MACRS Straight-Line Depreciation for Real Property Assuming
Mid-Month Convention* (Percentage Rates)
For Property Placed in Service after December 31, 1986: 27.5-Year Residential Real Property
Recovery The Applicable Percentage Is (Use the Column for the Month in the First Year the Property Is Placed in Service):
Year(s)
1
4
5
6
8
9
10
11
12
3.485
3.182
2.879
2.576
2.273
1.970
1.667
1.364
1.061
0.758
0.455
0.152
2-18
3.636
3.636
3.636
3.636
3.636
3.636
3.636
3.636
3.636
3.636
3.636
3.636
19-27
3.637
3.637
3.637
3.637
3.637
3.637
3.637
3.637
3.637
3.637
3.637
3.637
28
1.970
2.273
2.576
2.879
3.182
3.485
3.636
3.636
3.636
3.636
3.636
3.636
29
0.000
0.000
0.000
0.000
0.000
0.000
0.152
0.455
0.758
1.061
1.364
1.667
For Property Placed in Service after December 31, 1986, and before May 13, 1993:31.5-Year Nonresidential Real Property
The Applicable Percentage Is (Use the Column for the Month in the First Year the Property Is Placed in Service):
Recovery
Year(s)
3
4
5
6
7
10
11
12
3.042
2.778
2.513
2.249
1.984
1.720
1.455
1.190
0.926
0.661
0.397
0.132
2-19
3.175
3.175
3.175
3.175
3.175
3.175
3.175
3,175
3.175
3.175
3.175
3.175
20-31
3.174
3.174
3.174
3.174
3.174
3.174
3.174
3.174
3.174
3.174
3.174
3.174
32
1.720
1.984
2.249
2.513
2.778
3.042
3.175
3.175
3.175
3.175
3.175
3.175
33
0.000
0.000
0.000
0.000
0.000
0.000
0.132
0.397
0.661
0.926
1.190
1,455
For Property Placed in Service after May 12, 1993: 39-Year Nonresidential Real Property
The Applicable Percentage Is (Use the Column for the Month in the First Year the Property Is Placed in Service):
Recovery
Year(s)
1
2.
4
6.
8
10
11
12
1.
2.461
2.247
2.033
1.819
1.605
1.391
1.177
0.963
0.749
0.535
0.321
0.107
2-39
2.564
2.564
2.564
2.564
2.564
2.564
2.564
2.564
2.564
2.564
2.564
2.564
40
0.107
0.321
0.535
0.749
0.963
1.177
1.391
1.605
1.819
2.033
2.247
2.461
*The official tables contain a separate row for each year. For ease of presentation, certain years are
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