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27 April, 20:14

Tom Tom LLC purchased a rental house and land during the current year for $150,000. The purchase price was allocated as follows: $100,000 to the building and $50,000 to the land. The property was placed in service on May 22. Calculate Tom Tom's maximum depreciation for this first year:

A. $1,605

B.$2,273

C. $2,408

D. $3,410

E. None of these

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Answers (1)
  1. 27 April, 20:38
    0
    correct option is B.$2,273

    Explanation:

    given data

    purchased = $150,000

    building = $100,000

    land = $50,000

    to find out

    Tom's maximum depreciation for this first year

    solution

    we will apply here The mid month convention applies

    and recovery period for Residential property = 27.5-year

    maximum depreciation will be here as

    maximum depreciation = $100,000 * 2.273%

    maximum depreciation = $100,000 * 0.02273

    maximum depreciation = $2,273

    so correct option is B.$2,273
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