Doug purchased a new factory building on january 15, 1990, for $400,000. on march 1, 2017, the building was sold. determine the cost recovery deduction for the year of the sale; doug did not use the macrs straight-line method.
a. $0
b. $1,587
c. $2,645
d. $12,696
e. none of the above

e. None of the above

Explanation:

Purchase Value of Machinery = $4,000,000

Life of building = 30 years

Depreciation per year (assuming no 5% residual value)

= (4,000,000 - 200,000)/30

= $ 126,667

Dep. till December 31, 2016 = 126667*21 years

                                               = $2,660,000

Dep. till March 1, 2017 from December 31, 2016

= (122667*2)/12

= $21,111  

Total Dep. till March 1, 2017 =  $2,660,000 + $21,111

                                              = $ 2,681,111

Cost of recovery deduction = $4,000,000 - $2,681,111

                                              = $ 1,318,889

Therefore, The cost recovery deduction for the year of the sale is $ 1,318,889

Sample The Old Kingdom should be given the award, as it established many of the traditions of the Egyptian government and culture, and was the first to create monuments.

Explanation: