On May 12 of year 1 Javier bought a building, consisting of the land it was on, to assemble his new equipment. The total cost of the buy was $1,495,000; $450,000 was allocated to the basis of the land and the remaining $1,045,000 was assigned to the basis of the building.
problem1. Using MACRS, what is Javier’s depreciation expense on the building for years 1 through 3?
problem2. What would be the year 3 depreciation expense if the building was sold on March 11 of year 3?
problem3. Answer the problem in part (a), except assume the building was bought and placed in service on March 15 instead of May 12.
problem4. Answer the problem in part (a), except suppose that the building is residential property.
problem5. What would be the depreciation for 2013, 2014, and 2015 if the property were non-residential property purchased and placed in service May 12, 1996 (assume the same original basis)?