Required information [The following information applies to the questions displayed below.] On December 15 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 $1,432,000; $317,000 was allocated to the basis of the land and the remaining $1,115,000 was allocated to the basis of the building. (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) a. Using MACRS, what is Javier's depreciation deduction on the building for years 1 through 3? Year Depreciation deduction 1 2 $ 28,589 3 3 $ 28,589 b. What would be the year 3 depreciation deduction if the building was sold on March 18 of year 3? Year 3 depreciation deduction c. Assume the building was purchased and placed in service on November 5 instead of December 15. Using MACRS, what is Javier's depreciation deduction on the building for years 1 through 3? Year Depreciation deduction 1 2 3 d. Assume the building is residential property. Using MACRS, what is Javier's depreciation deduction on the building for years 1 through 3? Year Depreciation deduction 1 2 3 e. What would be the depreciation for 2018, 2019, and 2020 if the property were nonresidential property purchased and placed in service December 15, 2001 (assume the same original basis)? Year Depreciation deduction 2018 2019 2020 TABLE 1 MACRS Half-Year Convention Depreciation Rate for Recovery Period Year 3-Year 5-Year 7-Year 10-Year 15-Year 20-Year 1 2 33.33% 44.45 14.81 7.41 3 20.00% 32.00 19.20 11.52 11.52 5.76 4 14.29% 24.49 17.49 12.49 8.93 8.92 8.93 4.46 5 6 7 10.00% 18.00 14.40 11.52 9.22 7.37 6.55 6.55 6.56 6.55 3.28 8 5.00% 9.50 8.55 7.70 6.93 6.23 5.90 5.90 5.91 5.90 5.91 5.90 5.91 5.90 5.91 2.95 9 10 11 12 13 14 15 16 17 18 19 20 21 3.750% 7.219 6.677 6.177 5.713 5.285 4.888 4.522 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 2.231 TABLE 2a MACRS Mid-Quarter Convention: For property placed in service during the first quarter Depreciation Rate for Recovery Period Year 5-Year 7-Year 1 2 3 35.00% 26.00 15.60 11.01 11.01 25.00% 21.43 15.31 10.93 8.75 8.74 1.38 7 8.75 8 1.09 TABLE 2b MACRS Mid-Quarter Convention: For property placed in service during the second quarter Depreciation Rate for Recovery Period Year 5-Year 7-Year 1 2 3 25.00% 30.00 18.00 11.37 11.37 4.26 4 5 6 17.85% 23.47 16.76 11.97 8.87 8.87 8.87 3.34 7 8 TABLE 2c MACRS Mid-Quarter Convention: For property placed in service during the third quarter Depreciation Rate for Recovery Period Year 5-Year 7-Year 1 10.71% 25.51 18.22 2 3 4 5 15.00% 34.00 20.40 12.24 11.30 7.06 13.02 6 7 9.30 8.85 8.86 5.53 TABLE 2d MACRS-Mid Quarter Convention: For property placed in service during the fourth quarter Depreciation Rate for Recovery Period Year 5-Year 7-Year -NM 5.00% 38.00 22.80 13.68 10.94 9.58 4 5 3.57% 27.55 19.6B 14.06 10.04 8.73 8.73 7.64 7 8 TABLE 3 Residential Rental Property Mid-Month Convention Straight Line-27.5 Years Month Property Placed in Service Year 1 2 3 4 5 6 7 00 9 10 11 12 1 2-9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 3.485% 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 1.97 3.182% 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 2.273 2.879% 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 2.576 2.576% 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 2.879 2.273% 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.182 1.970% 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.485 1.667% 3.636 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 0.152 1.364% 3.636 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 0.455 1.061% 3.636 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 0.758 0.758% 3.636 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 1.061 0.455% 3.636 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 1.364 0.152% 3.636 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 1.667 TABLE4 Nonresidential Real Property Mid-Month Convention Straight Line-31.5 Years (for assets placed in service before May 13, 1993) Month Property Placed in Service Year 1 2 3 4 5 6 7 8 9 10 11 12 1 2-7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 3.042% 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 1.720 2.778% 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 1.984 2.513% 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 2.249 2.249% 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 2.513 1.984% 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 2.778 1.720% 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.042 1.455% 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 0.132 1.190% 3.175 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.115 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 0.397 0.926% 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 0.661 0.661% 3.175 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 0.926 0.397% 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 1.190 0.132% 3.175 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 1.455 TABLE 5 Nonresidential Real Property Mid-Month Convention Straight Line-39 Years (for assets placed in service on or after May 13, 1993) Month Property Placed in Service Year 1 2 3 4 5 6 7 8 9 10 11 12 1 2-39 40 2.461% 2.564 0.107 2.247% 2.564 0.321 2.033% 2.564 0.535 1.819% 2.564 0.749 1.605% 2.564 0.963 1.391% 2.564 1.177 1.177% 2.564 1.391 0.963% 2.564 1.605 0.749% 2.564 1.819 0.535% 2.564 2.033 0.321% 2.564 2.247 0.107% 2.564 2.461