! Required information Problem 10-51 (LO 10-2) (Algo) (The following information applies to the questions displayed below.) On July 18 of year 1, Javier purchased a building, including the land it was on, to assemble his new equipment. The total cost of the purchase was $1,595,500; $463,000 was allocated to the basis of the land and the remaining $1,132,500 was allocated to the basis of the building. (Use MACRS Table 1 Table 2, Table 3, Table 4 and Table 5.) (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) Problem 10-51 Part d (Algo) d. Assume the building is residential property. Using MACRS, what is Javier's depreciation deduction on the building for years 1 through 3? Answer is complete but not entirely correct. Year 1 Depreciation deduction $ 5,148 X $ 41,178 $ 41,178 2 3 Table 1 MACRS Half-Year Convention Depreciation Rate for Recovery Period 5-Year 7-Year 10-Year 15-Year 3-Year 20-Year Year 1 33.33% 20.00% 14.29% 10.00% 5.00% 3.750% Year 2 44.45 32.00 24.49 18.00 9.50 7.219 Year 3 14.81 19.20 17.49 14.40 8.55 6.677 Year 4 7.41 11.52 12.49 11.52 7.70 6.177 Year 5 11.52 8.93 9.22 6.93 5.713 Year 6 5.76 8.92 7.37 6.23 5.285 Year 7 8.93 6.55 5.90 4.888 Year 8 4.46 6.55 5.90 4.522 Year 9 6.56 5.91 4.462 Year 10 6.55 5.90 4.461 4.462 Year 11 3.28 5.91 5.90 5.91 Year 12 Year 13 Year 14 4.461 4.462 4.461 5.90 5.91 2.95 4.462 4.461 Year 15 Year 16 Year 17 Year 18 4.462 4.461 Year 19 4.462 Year 20 4.461 Year 21 2.231 TABLE 2a MACRS Mid-Quarter Convention: For property placed in service during the first quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 35.00% 25.00% Year 2 26.00 21.43 Year 3 15.60 15.31 Year 4 11.01 10.93 Year 5 11.01 8.75 Year 6 1.38 8.74 Year 7 8.75 1.09 Year 8 TABLE 26 MACRS Mid-Quarter Convention: For property placed in service during the second quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 25.00% 17.85% Year 2 30.00 23.47 Year 3 18.00 16.76 Year 4 11.37 11.97 Year 5 11.37 8.87 Year 6 4.26 8.87 Year 7 8.87 Year 8 3.34 TABLE 2c MACRS Mid-Quarter Convention: For property placed in service during the third quarter Depreciation Rate for Recovery Period 5-Year 7-Year 15.00% 10.71% 34.00 25.51 Year 1 Year 2 Year 3 Year 4 20.40 18.22 12.24 13.02 Year 5 11.30 9.30 Year 6 7.06 8.85 Year 7 8.86 Year 8 5.53 TABLE 2d MACRS-Mid Quarter Convention: For property placed in service during the fourth quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 5.00% 3.57% Year 2 38.00 27.55 Year 3 22.80 19.68 Year 4 13.68 14.06 Year 5 10.94 10.04 Year 6 9.58 8.73 Year 7 8.73 Year 8 7.64 2 Month 8 TABLE 3 Residential Rental Property Mid-Month Convention Straight Line-27.5 Years Month Property Placed in Service Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Year 1 3.485% 3.182% 2.879% 2.576% 2.273% 1.970% 1.667% Year 2-9 3,636 3.636 3.636 3.636 3.636 3.636 3.636 Year 10 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 11 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Month 9 1.061% 1.364% 3.636 Month 10 Month 11 Month 12 0.758% 0.455% 0.152% 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 Year 12 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 1 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 Year 13 Year 14 Year 15 Year 16 3.637 3.636 3.636 3.637 3.636 3,636 3.637 3.636 3.637 3.636 3,637 3.637 3.636 3.637 3.637 3.637 3.636 3.637 3.637 3.637 3.637 3.636 3.637 3.636 3.637 3.636 3.636 3.636 Year 17 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.636 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3,636 3.636 3.636 3.636 3,636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.637 Year 18 Year 19 Year 20 Year 21 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.637 Year 22 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 Year 23 Year 24 Year 25 Year 26 Year 27 Year 28 Year 29 3.637 3.636 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.636 3.182 1.97 2.273 2.576 2.879 3.485 3.637 3.636 0.152 3.636 0.455 3.636 3.636 0.758 3.636 1.061 IT 3.636 1.364 1.667 Month 11 Month 10 0.661% 3.175 3.175 0.397% 3.175 Month 12 0.132% 3.175 3.175 3.175 3.175 3.174 3.175 3.174 3.175 3.175 3.174 3.175 3.174 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.174 3.175 3.174 3.175 3.175 3.174 3.175 3.174 TABLE 4 Nonresidential Real Property Mid-Month Convention Straight Line-31.5 Years (for assets placed in service before May 13, 1993) Month Property Placed in Service Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Year 1 3,042% 2.778% 2.513% 2.249% 1.984% 1.720% 1.455% 1.190% 0.926% Year 2-7 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 Year 8 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.175 3.175 Year 9 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 10 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 11 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 12 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 13 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 14 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 15 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 16 3,175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 17 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 18 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 19 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 20 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 21 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 22 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 23 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.115 3.174 Year 24 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 25 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 26 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 27 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 28 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 29 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 30 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 31 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 32 1.720 1.984 2.249 2.513 2.778 3.042 3.175 3.174 3.175 Year 33 0.132 0.397 0.661 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.175 3.174 3.175 3.174 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.175 3.174 3.174 3.175 3.174 3.174 3.175 3.174 3.175 3.174 3.175 3.175 3.174 3.175 3.175 3.174 3.174 3.175 3.174 3.174 3.175 3.174 3.175 3.175 3.174 3.175 3.174 1.455 0.926 1.190 TABLE 5 Nonresidential Real Property Mid-Month Convention Straight Line39 Years (for assets placed in service on or after May 13, 1993) Month Property Placed in Service Month 5 Month 6 Month 7 Month 1 Month 2 Month 3 Month 4 Month 8 Month 9 Month 10 Month 11 Month 12 Year 1 2.461% 2.247% 2.033% 1.819% 1.605% 1.391% 1.177% 0.963% 0.749% 0.535% 0.321% 0.107% Year 239 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 Year 40 0.107 0.321 0.535 0.749 0.963 1.177 1.391 1.605 1.819 2.033 2.247 2.461 ! Required information Problem 10-51 (LO 10-2) (Algo) (The following information applies to the questions displayed below.) On July 18 of year 1, Javier purchased a building, including the land it was on, to assemble his new equipment. The total cost of the purchase was $1,595,500; $463,000 was allocated to the basis of the land and the remaining $1,132,500 was allocated to the basis of the building. (Use MACRS Table 1 Table 2, Table 3, Table 4 and Table 5.) (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) Problem 10-51 Part d (Algo) d. Assume the building is residential property. Using MACRS, what is Javier's depreciation deduction on the building for years 1 through 3? Answer is complete but not entirely correct. Year 1 Depreciation deduction $ 5,148 X $ 41,178 $ 41,178 2 3 Table 1 MACRS Half-Year Convention Depreciation Rate for Recovery Period 5-Year 7-Year 10-Year 15-Year 3-Year 20-Year Year 1 33.33% 20.00% 14.29% 10.00% 5.00% 3.750% Year 2 44.45 32.00 24.49 18.00 9.50 7.219 Year 3 14.81 19.20 17.49 14.40 8.55 6.677 Year 4 7.41 11.52 12.49 11.52 7.70 6.177 Year 5 11.52 8.93 9.22 6.93 5.713 Year 6 5.76 8.92 7.37 6.23 5.285 Year 7 8.93 6.55 5.90 4.888 Year 8 4.46 6.55 5.90 4.522 Year 9 6.56 5.91 4.462 Year 10 6.55 5.90 4.461 4.462 Year 11 3.28 5.91 5.90 5.91 Year 12 Year 13 Year 14 4.461 4.462 4.461 5.90 5.91 2.95 4.462 4.461 Year 15 Year 16 Year 17 Year 18 4.462 4.461 Year 19 4.462 Year 20 4.461 Year 21 2.231 TABLE 2a MACRS Mid-Quarter Convention: For property placed in service during the first quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 35.00% 25.00% Year 2 26.00 21.43 Year 3 15.60 15.31 Year 4 11.01 10.93 Year 5 11.01 8.75 Year 6 1.38 8.74 Year 7 8.75 1.09 Year 8 TABLE 26 MACRS Mid-Quarter Convention: For property placed in service during the second quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 25.00% 17.85% Year 2 30.00 23.47 Year 3 18.00 16.76 Year 4 11.37 11.97 Year 5 11.37 8.87 Year 6 4.26 8.87 Year 7 8.87 Year 8 3.34 TABLE 2c MACRS Mid-Quarter Convention: For property placed in service during the third quarter Depreciation Rate for Recovery Period 5-Year 7-Year 15.00% 10.71% 34.00 25.51 Year 1 Year 2 Year 3 Year 4 20.40 18.22 12.24 13.02 Year 5 11.30 9.30 Year 6 7.06 8.85 Year 7 8.86 Year 8 5.53 TABLE 2d MACRS-Mid Quarter Convention: For property placed in service during the fourth quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 5.00% 3.57% Year 2 38.00 27.55 Year 3 22.80 19.68 Year 4 13.68 14.06 Year 5 10.94 10.04 Year 6 9.58 8.73 Year 7 8.73 Year 8 7.64 2 Month 8 TABLE 3 Residential Rental Property Mid-Month Convention Straight Line-27.5 Years Month Property Placed in Service Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Year 1 3.485% 3.182% 2.879% 2.576% 2.273% 1.970% 1.667% Year 2-9 3,636 3.636 3.636 3.636 3.636 3.636 3.636 Year 10 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 11 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Month 9 1.061% 1.364% 3.636 Month 10 Month 11 Month 12 0.758% 0.455% 0.152% 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 Year 12 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 1 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 Year 13 Year 14 Year 15 Year 16 3.637 3.636 3.636 3.637 3.636 3,636 3.637 3.636 3.637 3.636 3,637 3.637 3.636 3.637 3.637 3.637 3.636 3.637 3.637 3.637 3.637 3.636 3.637 3.636 3.637 3.636 3.636 3.636 Year 17 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.636 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3,636 3.636 3.636 3.636 3,636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.637 Year 18 Year 19 Year 20 Year 21 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.637 Year 22 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 Year 23 Year 24 Year 25 Year 26 Year 27 Year 28 Year 29 3.637 3.636 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.636 3.182 1.97 2.273 2.576 2.879 3.485 3.637 3.636 0.152 3.636 0.455 3.636 3.636 0.758 3.636 1.061 IT 3.636 1.364 1.667 Month 11 Month 10 0.661% 3.175 3.175 0.397% 3.175 Month 12 0.132% 3.175 3.175 3.175 3.175 3.174 3.175 3.174 3.175 3.175 3.174 3.175 3.174 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.174 3.175 3.174 3.175 3.175 3.174 3.175 3.174 TABLE 4 Nonresidential Real Property Mid-Month Convention Straight Line-31.5 Years (for assets placed in service before May 13, 1993) Month Property Placed in Service Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Year 1 3,042% 2.778% 2.513% 2.249% 1.984% 1.720% 1.455% 1.190% 0.926% Year 2-7 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 Year 8 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.175 3.175 Year 9 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 10 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 11 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 12 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 13 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 14 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 15 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 16 3,175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 17 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 18 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 19 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 20 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 21 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 22 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 23 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.115 3.174 Year 24 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 25 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 26 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 27 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 28 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 29 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 30 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 31 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 32 1.720 1.984 2.249 2.513 2.778 3.042 3.175 3.174 3.175 Year 33 0.132 0.397 0.661 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.175 3.174 3.175 3.174 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.175 3.174 3.174 3.175 3.174 3.174 3.175 3.174 3.175 3.174 3.175 3.175 3.174 3.175 3.175 3.174 3.174 3.175 3.174 3.174 3.175 3.174 3.175 3.175 3.174 3.175 3.174 1.455 0.926 1.190 TABLE 5 Nonresidential Real Property Mid-Month Convention Straight Line39 Years (for assets placed in service on or after May 13, 1993) Month Property Placed in Service Month 5 Month 6 Month 7 Month 1 Month 2 Month 3 Month 4 Month 8 Month 9 Month 10 Month 11 Month 12 Year 1 2.461% 2.247% 2.033% 1.819% 1.605% 1.391% 1.177% 0.963% 0.749% 0.535% 0.321% 0.107% Year 239 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 Year 40 0.107 0.321 0.535 0.749 0.963 1.177 1.391 1.605 1.819 2.033 2.247 2.461