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On November 10 of year 1, Javier purchased a building, including the land it was...

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Accounting

On November 10 of year 1, Javier purchased a building, including the land it was on, to assemble his new equipment. The total cost of the purchase was $2,000,000; $600,000 was allocated to the basis of the land and the remaining $1,400,000 was allocated to the basis of the building (10).

Part A What is the first year depreciation if the building was placed in service in January of that year (10)?

Part B What is the depreciation deduction in the year the building is sold (5)?

TABLE 5 Nonresidential Real Property Mid-Month Convention Straight Line39 Years (for assets placed in service on or after May 13, 1998)

Month Property Placed in Service
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Year 1 2.461% 2.247% 2.033% 1.819% 1.605% 1.391% 1.177% 0.963% 0.749% 0.535% 0.321% 0.107%
Year 239 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564
Year 40 0.107 0.321 0.535 0.749 0.963 1.177 1.391 1.605 1.819 2.033 2.247 2.461

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