- Guadalupe purchases an office building to use in her business at a cost of $520,000. She properly allocates $20,000 of the cost to the land and $500,000 to the building. Assuming that Guadalupe would like to deduct the maximum depreciation on the building, what is her first-year depreciation on the building if she purchases the building on
- June 30, 1992?
June 30, 1994?
- June 30, 1992?
The property is classified as 31.5-year nonresidential real estate because it is placed into service after 1986 and before May 13, 1994. The depreciation rate for month 6 and year one of Table A10-8, is 1.720%. Multiplying this rate by the depreciable basis of $500,000 results in the first-year depreciation on the building of $8,600.
$500,000 basis of the building x 1.720% = $8,600
- June 30, 1994?
Because the property is placed into service after May 12, 1994, the classification is 39-year nonresidential real estate. The depreciation rate for month 6 and year 1 of Table A10-9 is 1.391%. Accordingly, the first-year depreciation on the building is $6,955:
$500,000 basis of the building x 1.391% = $6,955
