1. On November 4, 2017, Blue Company acquired an asset (27.5-year residential real property) for $200,000 for use in its business. In 2017 and 2018, respectively, Blue took $642 and $5,128 of cost recovery. These amounts were incorrect; Blue applied the wrong percentages (i.e., those for 39-year rather than 27.5-year assets). Blue should have taken $910 and $7,272 cost recovery in 2017 and 2018, respectively. On January 1, 2019, the asset was sold for $180,000.
2. If required, round all computations to the nearest dollar.
3. Click here to access the depreciation tables in the textbook.
4. a.The adjusted basis of the asset at the end of 2018 is $.
5. b.The cost recovery deduction for 2019 is $.
6. c.The _______ on the sale of the asset in 2019 is $.