Frank operates a construction business in Dallas, Texas. On May 1, 2019, Frank purchased a warehouse for his business. The warehouse cost $1,500,000 ($500,000 for land and $1,000,000 for improvements). In November 2019, Frank purchased the following business property: equipment for $100,000, light-duty truck for $50,000, and office furniture and equipment for $50,000. Please calculate Franks 2019 depreciation deductions. Be sure to explain your calculations fully.

What income would Frank report if he decided to sell the warehouse and equipment on January 1, 2021 so he could upgrade the business? Assume he could sell the warehouse for $1,500,000 and the equipment for $190,000 ($95,000 for equipment, $47,500 for truck, and $47,500 for office furniture and equipment). Be sure to fully explain your answer.

Guidelines for Federal Tax Accounting:

Recovery period for office equipment- 7 years (double declining depreciation and half year convention)

Light general purpose trucks recovery period- 5 years (double declining depreciation and half year convention)

Real estate recovery period: 39 years (straight line depreciation and mid month convention)