Problem 9-61 Essay

1137 WordsMar 9, 20145 Pages
ACCT 420-D1 TAX REASERCH PROBLEM 9-61 From Prentice Hall federal taxation Caitlin and Wally formed the C&W Partnership on September 20, 2012. Caitlin contributed cash of $195,000, and Wally contributed office furniture with a FMV of $66,000. He bought the furniture for $60,000 on January 5, 2012, and placed it in service on that date. Wally will not elect Sec. 179 expensing on the furniture and elected out of bonus depreciation. He also contributed and office building and land with a combined FMV of $129,000. The land’s FMV is $9,000. Wally bought the land in 2005 for $8,000 and had the building constructed for $100,000. The building was placed in service in June 2008. Required: Your tax…show more content…
26 USC § 168 (c) the building has 39 year recovery period. The calculation of depreciation for each year is found by multiplying the MACRS value for the relevant year by the cost of the nonresidential real property at the time of purchase. The basis at the time of contribution is found by summing the depreciation values for each year with one exception, the MACRS value for 2012 must be adjusted for the percentage of the year that the property was under the partnership. This is calculated by multiplying the MACRS value by the percentage of the year completed at the time of contribution. See the calculations below: Basis: Building Contribution Date of Purchase 2008 Date of Contribution 2012 Time under owner in 2012 0.67 Purchase Cost $ 100,000.00 Year MACRS 39yr, Straight-Line 14.29% 2008 0.01391 $ 1,391.00 2009 0.02564 $ 2,564.00 2010 0.02564 $ 2,564.00 2011 0.02564 $ 2,564.00 2012 0.02564 $ 2,564.00 Total

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