Fine LLC purchased an office building and land years ago for

Fine LLC purchased an office building and land years ago for $250,000. The purchase price was allocated as follows: $200,000 to the building and $50,000 to the land. The property was placed in service on October 12. If the property is disposed of on February 2 during the 10th year, calculate Fine\'s maximum depreciation in the 10th year.

Solution

As per the US Taxation Laws, land is not subject to depreciation.

Building is subject to depreciation @ 10%

Hence, if the property is disposed off on February 2 during the 10th year, Fine\'s maximum depreciation for the 10th year will be $ 2,000.