The value of the building on the property is $220,000. If the building has an economic life of 50 years, what is the depreciated value of the building after 5 years? property purchase was at $270,000.

The value of the building on the property is $220,000. If the building has an economic life of 50 years, what is the depreciated value of the building after 5 years? property purchase was at $270,000.

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter8: Property Transactions: Capital Gains And Losses, Section 1231 And Recapture Provisions

Section: Chapter Questions

Problem 9CE

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

The value of the building on the property is $220,000. If the building has an economic life of 50 years, what is the depreciated value of the building after 5 years?

property purchase was at $270,000.

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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