The IRS uses Cost Recovery Tables to calculate the deductions you, the investor, may use to reduce the basis in a property. The rates to calculate the cost recovery (depreciation) are not the same every year when using a holding period and calculating a sale/disposition. Looking on Line 11 of the CFAW, and using a holding period of five years, calculate the cost recovery for years 1 - 5 using the following assumptions: Acquisition Basis: $1.420,000 . Cost Recovery Value - Improvements: $994,000 Useful Life: 27.5 Years Cost Recovery Method: Straight Line IRS Table (for residential property) Acquisition and Disposition Year Percentage: 3.485 IRS Table (for residential property) Full Year Held: 3.636 1. Cost Recovery for tax purposes Year 1 $36,142 Year 2 $36,142 Year 3 $36,142 Year 4 $36,142 Year 5 $36,142 2. Cost Recovery for tax purposes Year 1 $34.142 Year 2 $36,142 Year 3 $36,142 Year 4 $36,142 Year 5 $34.641 3. Cost Recovery for tax purposes Year 1 $34,841 Year 2 $36.142 Year 3 $36,142 Year 4 $36,142 Year 5 $36,641 4 Cost Recovery for tax purposes Year 1 $34,641 Year 2 $36,142 Year 3 $36,142 Year 4 $36,142