Option D is the correct choice.
jaspen purchased a factory building on November 15, 2002, for $5,000,000. jaspen sells the factory building on February 2, 2022. the cost recovery deduction for the year of the sale would be $19,844.
The capacity of an organization to recover (deduct) the costs of its investments is known as cost recovery. It can have an impact on investment choices and is crucial in determining a company's tax base. The process of recovering the cost of any expense is known as cost recovery, often known as the cost recovery method. The cost recovery approach accounts for the fact that recovering costs don't always occur immediately or even within the same year when it comes to closing the books.
Jaspen bought the structure on November 15, 2002, and on February 2, 2022, it sold the factory facility.
The structure cost $5,000,000.
Cost recovery deduction for the year of sale
= [(0.3175 * 5,000,000 * 1.5) / 12]
= 2,381,25 / 12
Therefore, the Cost recovery deduction for the year of sale = $19,844 (OPTION D)
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<u>COMPLETE QUESTION:</u>
Jaspen purchased a factory building on November 15, 2002, for $5,000,000. Jaspen sells the factory building on February 2, 2022. The cost recovery deduction for the year of the sale would be:
a.$158,750.
b.$26,458.
c.$16,025.
d.$19,844.
e.$0.
