Problem 14-75 (b) (LO. 8, 10) On March 6, 2016, Cloe Company acquired an office building for $9,700,000 (with $700,000 being allocated to the land). The straight-line cost recovery method was used. The property was sold on June 22, 2020, for $8,700,000. Click here to access the Exhibit for MACRS Straight-Line Depreciation for Real Property. If an amount is zero, enter "0". Do not round cost recovery factors. Round the total cost recovery deduction to the nearest dollar. a. Compute the cost recovery and adjusted basis for the building. The cost recovery is $ and the adjusted basis for the building is $ b. What are the amount and nature of Cloe's gain or loss from disposition of the property? What amount, if any, of the gain is unrecaptured § 1250 gain? There is $ of recognized on the sale of the property, of which $ is subject to § 1250 recapture.
Problem 14-75 (b) (LO. 8, 10) On March 6, 2016, Cloe Company acquired an office building for $9,700,000 (with $700,000 being allocated to the land). The straight-line cost recovery method was used. The property was sold on June 22, 2020, for $8,700,000. Click here to access the Exhibit for MACRS Straight-Line Depreciation for Real Property. If an amount is zero, enter "0". Do not round cost recovery factors. Round the total cost recovery deduction to the nearest dollar. a. Compute the cost recovery and adjusted basis for the building. The cost recovery is $ and the adjusted basis for the building is $ b. What are the amount and nature of Cloe's gain or loss from disposition of the property? What amount, if any, of the gain is unrecaptured § 1250 gain? There is $ of recognized on the sale of the property, of which $ is subject to § 1250 recapture.
Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion
Section: Chapter Questions
Problem 7BCRQ
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Transcribed Image Text:Exhibit 8.8 MACRS Straight-Line Depreciation for Real Property Assuming
Mid-Month Convention* (Percentage Rates)
For Property Placed in Service after December 31, 1986: 27.5-Year Residential Real Property
Recovery The Applicable Percentage Is (Use the Column for the Month in the First Year the Property Is Placed in Service):
Year(s)
1
2
3
4
5
6
8
9
10
11
12
1
3.485
3.182
2.879
2.576
2.273
1.970
1.667
1.364
1.061
0.758
0.455
0.152
2-18
3.636
3.636
3.636
3.636
3.636
3.636
3.636
3.636
3.636
3.636
3.636
3.636
19-27
3.637
3.637
3.637
3.637
3.637
3.637
3.637
3.637
3.637
3.637
3.637
3.637
28
1.970
2.273
2.576
2.879
3.182
3.485
3.636
3.636
3.636
3.636
3.636
3.636
29
0.000
0.000
0.000
0.000
0.000
0.000
0.152
0.455
0.758
1.061
1.364
1.667
For Property Placed in Service after December 31, 1986, and before May 13, 1993: 31.5-Year Nonresidential Real Property
The Applicable Percentage Is (Use the Column for the Month in the First Year the Property Is Placed in Service):
Recovery
Year(s)
1
2
3
6.
7
8
10
11
12
3.042
2.778
2.513
2.249
1.984
1.720
1.455
1.190
0.926
0.661
0.397
0.132
2-19
3.175
3.175
3.175
3.175
3.175
3.175
3.175
3.175
3.175
3.175
3.175
3.175
20-31
3.174
3.174
3.174
3.174
3.174
3.174
3.174
3.174
3.174
3.174
3.174
3.174
32
1.720
1.984
2.249
2.513
2.778
3.042
3.175
3.175
3.175
3.175
3.175
3.175
33
0.000
0.000
0.000
0.000
0.000
0.000
0.132
0.397
0.661
0.926
1.190
1.455
For Property Placed in Service after May 12, 1993: 39-Year Nonresidential Real Property
Recovery The Applicable Percentage Is (Use the Column for the Month in the First Year the Property Is Placed in Service):
Year(s)
1
2
3
4
5
6
7
8
9
10
11
12
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
2-39
2.564
2.564
2.564
2.564
2.564
2.564
2.564
2.564
2.564
2.564
2.564
2.564
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
*The official tables contain a separate row for each year. For ease of presentation, certain years are grouped in
these tables. In some instances, this will produce a difference of .001 for the last digit when compared with the
official tables.
Transcribed Image Text:Problem 14-75 (b) (LO. 8, 10)
On March 6, 2016, Cloe Company acquired an office building for $9,700,000 (with $700,000
being allocated to the land). The straight-line cost recovery method was used. The property
was sold on June 22, 2020, for $8,700,000.
Click here to access the Exhibit for MACRS Straight-Line Depreciation for Real Property.
If an amount is zero, enter "0". Do not round cost recovery factors. Round the total
cost recovery deduction to the nearest dollar.
a. Compute the cost recovery and adjusted basis for the building.
The cost recovery is $
and the adjusted basis for the building is $
b. What are the amount and nature of Cloe's gain or loss from disposition of the property?
What amount, if any, of the gain is unrecaptured § 1250 gain?
There is $
of recognized
on the sale of the property, of which $
is subject to § 1250 recapture.
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