Question 3: Assume that during the last month of the 100th year of ownership, the property in question 2 (See Picture below) is sold for $1.5million. Assume also that the seller incurs transaction costs equaling 6% of the sales price. What is the amount of the gain or loss on the sale. PLEASE SOLVE IN EXCEL

This picture is question 2 already solved to help solve for question 3

D E F H 1 Pr:2. Annual depreciation allowance (a.k.a. cost recovery allowance) A residential rental property is acquired during the first month of the taxable year, at a total cost (including transaction costs) of $1.2 million. Of this amount, $200,000 is properly attributable to the land. Determine the annual depreciation allowance for the first year and for each of the ensuring nine years. 2 3 4 5 Purchase price Less: Amount attributable to land Initial tax basis of improvements $ $1,200,000 (200,000) $1,000,000 As per question 6 7 8 Monthly recovery allowance First year's allowance (rounded) 10 Subsequent years (rounded) 9 $3,030 $34,848 $36,364 = $1,000,000 / 27.5 years / 12 months = $3,030.30 x 11.5 months = $3,030.30 x 12 months 11 12 13 14 15 16 17 18