On March 31, 2015, John Doe purchased three assets:
A machine for $20,000 that had a 5 year MACRS life
An office building for $400,000
1000 shares of IBM stock for $100 per share
He sold these three assets on March 31, 2018 for
Machine $17,000
Building $410,000
Stock $50,000
Assume his adjusted gross income was $50,000 exclusive of these transactions. Compute his adjusted income for 2018, using the provided MACRS schedule.
TABLE 8.6 MACRS Straight-Line Depreciation for Real Property Assuming Mid-Month Convention* LOR For Property Placed in Service after December 31, 1986: 27.5-Year Residential Real Property Recovery Year(s) The Applicable Percentage Is (Use the Column for the Month in the First Year the Property Is Placed in Service): 3 5 5 6 7 8 9 10 11 12 3.485 3.182 2.879 2.576 2.273 1.970 1.667 1.364 1.061 0.758 0.455 0.152 12-18 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 19-27 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.6373.637 3.637 3.637 3.637 28 1.970 2.273 2.576 2.879 .3.182 3.485 3.636 3.636 3.636 3.636 3.636 3.636 0.000 0.000 0.000 0.000 0.000 0.000 0.152 0.455 0.758 1.061 1.364 1.667 For Property Placed in Service after December 31, 1986, and before May 13, 1993: 31.5-Year Nonresidential Real Property Recovery The Applicable Percentage Is (Use the Column for the Month in the First Year the Property is placed in Service): Year(s) 2 10 11 12 29 5 52-19 3.042 2.778 2.513 2.249 1.984 1.720 1.455 1.190 0.926 0.661 0.397 0.132 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3 .175 3.175 3.175 3,175 20-31 3.174 3.174 3.174 3.174 3.174 3.174 3.174 3.174 3.174 3.174 3.174 3.174 32 1.720 1.984 2.249 2.513 2.778 3.042 3.175 3.175 3.175 3.175 3.175 3.175 0.000 0.000 0.000 0.000 0.000 0.000 0.132 0.3970.661 0.926 1.190 1.455 For Property Placed in Service after May 12, 1993: 39-Year Nonresidential Real Property Recovery The Applicable Percentage Is (Use the Column for the Month in the First Year the Property is placed in Service): Year(s) 2 3 5 6 7 8 9 10 11 12 33 2.461 2.247 2.033 1.819 1.605 1.391 1.177 0.963 0.749 0.535 0.321 2-39 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 40 0.107 0.321 0.535 0.749 0.963 1.177 1.391 1.605 1.819 2.033 2.247 The official tables contain a separate row for each year. For ease of presentation, certain years are grouped in these tables. In some instances, this will produce a difference of .001 for the last digit when compared with the official tables. 0.107 2.564 2.461 TABLE 8.1 MACRS Accelerated Depreciation for Personal Property Assuming Half-Year Convention For Property Placed in Service after December 31, 1986 Recovery Year 3-Year 5-Year 7-Year 10-Year 15-Year 20-Year (200% DB) (200% DB) (200% DB) (200% DB) (150% DB) (150% DB) 33.33 44.45 14.81* 7.41 20.00 32.00 19.20 11.52* 11.52 5.76 14.29 24.49 17.49 12.49 8.93* 8.92 8.93 4.46 10.00 18.00 14.40 11.52 9.22 7.37 6.55* 6.55 6.56 6.55 3.750 7.219 6.677 6.177 5.713 .5.285 4.888 4.522 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 4.462* 3.28 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 2.231 *Switchover to straight-line depreciation
