Lopez acquired a building on June 1, 2014, for $9,829,900. Compute the depreciation deduction assuming the building is classified as (a) residential and (b) non residential. If required, round your answers to the nearest dollar. a.  Calculate Lopez's cost recovery deduction for 2019 if the building is classified as residential rental real estate. _______ b.  Calculate Lopez's cost recovery deduction for 2019 if the building is classified as nonresidential real estate._______

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Lopez acquired a building on June 1, 2014, for $9,829,900. Compute the depreciation deduction assuming the building is classified as (a) residential and (b) non residential.

If required, round your answers to the nearest dollar.

a.  Calculate Lopez's cost recovery deduction for 2019 if the building is classified as residential rental real estate. _______

b.  Calculate Lopez's cost recovery deduction for 2019 if the building is classified as nonresidential real estate._______

Expert Solution
Step 1

The rate of depreciation will be 3.636% on the total value of the asset on the straight-line method.

The rate of MACRS applicable will be 2.564% on the total value on a non-residential basis

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