Question

On May 30, 2018, Jane purchased a factory building to use for her business. In August 2019, Jane paid $300,000 for improvements to the building. Determine Jane's total deduction with respect to the building improvements for 2019.

Answer 1

Answer:

$2,889

Explanation:

We need to use the MACRS cost recovery schedule for business property (39 years) placed on service during the 8th month = 0.963%

Jane's total deduction = total cost of improvements x depreciation schedule = $300,000 x 0.963% = $2,889

Modified accelerated cost recovery system (MACRS) is the depreciation method established by the IRS to calculate tax deductions based on asset  depreciation.