1 On July 2 2012 Scott purchased a commercial building The c

1- On July 2, 2012, Scott purchased a commercial building. The cost basis assigned to the building us $600,000. Scott also owns a residential apartment building he purchased on June 15, 2011 with a cost basis of $400,000.

A) Calculate Scott’s total depreciation deduction for the buildings for 2012, using the Modified Accelerated Cost Recovery System.

B) Calculate Scott’s total depreciation for the buildings for 2013, using the Modified Accelerated Cost Recovery System.

Solution

commercial building $600,000

Residential building   $400,000

total cost =$1000,000

Total depreciation deduction for 2012 =12.5% = $125,000

Total depreciation for the building 2013 =15% = $150,000