Answer:
A. $191,818
B. $303
C. Loss; $11,515
Explanation:
A. Calculation to determine what The adjusted basis of the asset at the end of 2019 is
Cost of asset $200,000
Less Greater of allowed and allowable cost recovery:
2018 $910
2019 $7,272 ($8,182)
($910+$7,272=$81,82)
Adjusted basis of the asset at the end of 2019 $191,818
($200,000-$8,182)
Therefore the Adjusted basis of the asset at the end of 2019 will be $191,818
B. Calculation to determine what The cost recovery deduction for 2020 is
Cost recovery deduction for 2020= ($200,000 x .03636 x 0.5 / 12)
Cost recovery deduction for 2020=$303
Therefore The Cost recovery deduction for 2020 is $303
C. Calculation to determine what The____on the sale of the asset in 2020 is
Based on the information given we would be using 0.3636 as the percentage for 27.5-year assets.
Cost of asset $200,000
Less Greater of allowed and allowable cost recovery:
2018 $910
2019 $7,272 ($8,182)
($910+$7,272=$81,82)
Adjusted basis of the asset at the end of 2019 $191,818
($200,000-$8,182)
Less Cost recovery for 2020 $303
($200,000 * .03636 * 0.5 / 12)
Basis on date of sale $191,515
($191,818-$303)
Loss on sale of asset ($11,515)
($180,000 – $191,515)
Therefore The LOSS on the sale of the asset in 2020 is $11,515
