On February 8 2016 Holly purchased a residential apartment b

On February 8 2016, Holly purchased a residential apartment building. The cost basis assigned to the building is $209,000. Holly also owns another residential apartment building that she purchased on October 15, 2016, with a cost basis of $715,000 Click here to access the depreclation tables. If required, round intermediate calculations and final answers to nearest dollar a. Calculate Holly\'s total depreciation deduction for the apartments for 2016 using MACRS. Foodback b. Calculate Holly\'s total depreciation deduction for the apartments for 2017 using MACRS

Solution

Note: As the 209,000 house is aquired in month of February we would be considering the MARCS rate in 8 months to find the depreciation of that house. Similarly 6 month MARCS rate to find the depreciation of $715000 worth house as it is purchased in month of October .

2016 TOTAL DEPRECIATION USING MARCS RATES:

Depreciation (2016)= ( $209000X 0.01364X )+($715000X 0.01970)

= $16936

Note: As the 209,000 house is aquired in month of February we would be considering the MARCS rate in 8 months to find the depreciation of that house. Similarly 6 month MARCS rate to find the depreciation of $715000 worth house as it is purchased in month of October . 2017 TOTAL DEPRECIATION USING MARCS TABLE: As this is the second year after purchase the depreciation rate of MARCS for 2-9 years which is 3.636% is applicable for both houses to find their depreciations. Deprecition (2014)= (0.03636X$209000 ) + ( 0.03636X$715000) = $33597