Ch. 9 Homework Solutions 12

Ch 9 Homework - SOLUTIONS TO PROBLEM MATERIALS 9-18 Section 1016 requires that the basis of property be adjusted to reflect allowed or allowable

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Unformatted text preview: SOLUTIONS TO PROBLEM MATERIALS 9-18 Section 1016 requires that the basis of property be adjusted to reflect allowed or allowable depreciation. Although R has not claimed any depreciation on the property, she must reduce the basis by the amount allowable, $100,000 [($100,000 / 30 years) × 30 years]. A gain of $170,000 results [$170,000 - ($100,000 - $100,000)]. R would receive no benefit from the reduction. [See Reg. § 1.167(a)-10.] 9-28 a. The furniture is seven-year property while the building is nonresidential real estate. Depreciation for 2011 is $42,811, calculated as follows: Building—$700,000 × 2.033% $14,231 (See Exhibit 9.6.) C-7 Furniture—$200,000 × 14.29% 28,580 (See Exhibit 9.4.) C-2 Total depreciation $42,811 Or (using the formula), $700000 /39 Life x 9.5/12 Accounting convention (mid-month) = $14209 and $200000-0 Accumulated depreciation /7 Life x 2 Method (DDB) x .5 Accounting convention (half year) = $28571 b. Depreciation for 2012 is $66,928, determined as follows: Building—$700,000 × 2.564% $17,948 (See Exhibit 9.6.) C-7 Furniture—$200,000 × 24.49% 48,980 (See Exhibit 9.4.) C-2 Total depreciation $66,928 Or, $700000/39 = $17,949 and ($200000-28571) /7 x 2 = $48,980 c. The office building and the furniture were sold on July 20, 2013. In this case, the mid-month convention applies in computing the depreciation for the building, while the half-year convention applies in computing the depreciation for the furniture....
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This note was uploaded on 04/03/2012 for the course TAX 802 taught by Professor Angelini during the Spring '12 term at Suffolk.

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Ch 9 Homework - SOLUTIONS TO PROBLEM MATERIALS 9-18 Section 1016 requires that the basis of property be adjusted to reflect allowed or allowable

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