1 answer

2. Bhaskar purchased a new factory building and land on September 10, 2019, for $3,700,000.($500,000 of the purchas...

Question:

2. Bhaskar purchased a new factory building and land on September 10, 2019, for $3,700,000.($500,000 of the purchase price wa
2. Bhaskar purchased a new factory building and land on September 10, 2019, for $3,700,000.($500,000 of the purchase price was allocated to the land.) He elected the alternative depreciation system (ADS). Determine the cost recovery deduction for 2020. a. $23,328 b. $80,000 c. $82,048 d. $92,500

Answers

Solution

Determination of the cost recovery deduction for 2020:

Purchase price of factory building and land = $3,700,000

Less: Purchase price allocated to land = $500,000
depreciable value of building = 3,200,000

Cost recovery deduction for 2020 = 0.25 x 3,200,000 = $80,000

.

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