Exhibit 8.8 MACRS Straight-Line Depreciation for Real Property AssumingMid-Month Convention* (Percentage Rates)For Property Placed in Service after December 31, 1986: 27.5-Year Residential Real PropertyRecovery The Applicable Percentage Is (Use the Column for the Month in the First Year the Property Is Placed in Service):Year(s)1234568910111213.4853.1822.8792.5762.2731.9701.6671.3641.0610.7580.4550.1522-183.6363.6363.6363.6363.6363.6363.6363.6363.6363.6363.6363.63619-273.6373.6373.6373.6373.6373.6373.6373.6373.6373.6373.6373.637281.9702.2732.5762.8793.1823.4853.6363.6363.6363.6363.6363.636290.0000.0000.0000.0000.0000.0000.1520.4550.7581.0611.3641.667For Property Placed in Service after December 31, 1986, and before May 13, 1993: 31.5-Year Nonresidential Real PropertyThe Applicable Percentage Is (Use the Column for the Month in the First Year the Property Is Placed in Service):RecoveryYear(s)1236.781011123.0422.7782.5132.2491.9841.7201.4551.1900.9260.6610.3970.1322-193.1753.1753.1753.1753.1753.1753.1753.1753.1753.1753.1753.17520-313.1743.1743.1743.1743.1743.1743.1743.1743.1743.1743.1743.174321.7201.9842.2492.5132.7783.0423.1753.1753.1753.1753.1753.175330.0000.0000.0000.0000.0000.0000.1320.3970.6610.9261.1901.455For Property Placed in Service after May 12, 1993: 39-Year Nonresidential Real PropertyRecovery The Applicable Percentage Is (Use the Column for the Month in the First Year the Property Is Placed in Service):Year(s)12345678910111212.4612.2472.0331.8191.6051.3911.1770.9630.7490.5350.3210.1072-392.5642.5642.5642.5642.5642.5642.5642.5642.5642.5642.5642.564400.1070.3210.5350.7490.9631.1771.3911.6051.8192.0332.2472.461*The official tables contain a separate row for each year. For ease of presentation, certain years are grouped inthese tables. In some instances, this will produce a difference of .001 for the last digit when compared with theofficial tables. Problem 14-75 (b) (LO. 8, 10)On March 6, 2016, Cloe Company acquired an office building for $9,700,000 (with $700,000being allocated to the land). The straight-line cost recovery method was used. The propertywas sold on June 22, 2020, for $8,700,000.Click here to access the Exhibit for MACRS Straight-Line Depreciation for Real Property.If an amount is zero, enter "0". Do not round cost recovery factors. Round the totalcost recovery deduction to the nearest dollar.a. Compute the cost recovery and adjusted basis for the building.The cost recovery is $and the adjusted basis for the building is $b. What are the amount and nature of Cloe's gain or loss from disposition of the property?What amount, if any, of the gain is unrecaptured § 1250 gain?There is $of recognizedon the sale of the property, of which $is subject to § 1250 recapture.

Adjusted basis is helpful to calculate the amount of gain or loss incurred on the sale of the asset. It is calculated by adding the cost of improvements to the original cost of the asset. The amount of depreciation charged on the asset is deducted to calculate the adjusted basis of the asset.A): Cost recovery and adjusted basis: Year Remaining recovery Base Depreciation Accumulated Depreciation 2016 39 9,000,000 230,760 230,760 2017 38.5 8,769,240 224,843.3 455,603.3 2018 37.5 8,544,397 219,078.3 674,681.6 2019 36.5 8,325,319 213,461.2 888,142.8 2020 35.5 8,111,858 207,988 1,096,131 2021 34.5 7,903,870 202,655.2 1,298,786 Cost Recovery $7,903,870 Adjusted basis ($7,903,870+$700,000) $8,603,870 (B): Gain or loss in disposition: Sale value $8,700,000 Less: Adjusted basis ($8,603,870) Gain $96,130 Section 1250 gain-$1,250.

Business

Accounting

Problem 14-75 (b) (LO. 8, 10) On March 6, 2016, Cloe Company acquired an office building for $9,700,000 (with $700,000 being allocated to the land). The straight-line cost recovery method was used. The property was sold on June 22, 2020, for $8,700,000. Click here to access the Exhibit for MACRS Straight-Line Depreciation for Real Property. If an amount is zero, enter "0". Do not round cost recovery factors. Round the total cost recovery deduction to the nearest dollar. a. Compute the cost recovery and adjusted basis for the building. The cost recovery is $ and the adjusted basis for the building is $ b. What are the amount and nature of Cloe's gain or loss from disposition of the property? What amount, if any, of the gain is unrecaptured § 1250 gain? There is $ of recognized on the sale of the property, of which $ is subject to § 1250 recapture.

Problem 14-75 (b) (LO. 8, 10) On March 6, 2016, Cloe Company acquired an office building for $9,700,000 (with $700,000 being allocated to the land). The straight-line cost recovery method was used. The property was sold on June 22, 2020, for $8,700,000. Click here to access the Exhibit for MACRS Straight-Line Depreciation for Real Property. If an amount is zero, enter "0". Do not round cost recovery factors. Round the total cost recovery deduction to the nearest dollar. a. Compute the cost recovery and adjusted basis for the building. The cost recovery is $ and the adjusted basis for the building is $ b. What are the amount and nature of Cloe's gain or loss from disposition of the property? What amount, if any, of the gain is unrecaptured § 1250 gain? There is $ of recognized on the sale of the property, of which $ is subject to § 1250 recapture.

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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Lopez acquired a building on June 1, 2017, for $9,644,500. 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 2022 if the building is classified as residential rental real estate. b. Calculate Lopez's cost recovery deduction for 2022 if the building is classified as nonresidential real estate.
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