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Tax Depreciation

Please double check these two problems.

The only concern I have is the 5 versus 8 years on the first problem. However, I think I did the calculations correctly.

In the 2nd problem, only the building is depreciable and not the land. So, I subtracted the cost of the land out of the initial and salvage - and used that for the calculations. Since purchasing the land resulted in a "salvage" value of more (meaning it appreciated) than the initial cost, the annual "depreciation" values are negative. Is this wrong?



Solution Preview

For the first problem, the straight-line portion is correct, but for MACRS , the 5 years is actually depreciated over 6 years, and the depreciation rates under MACRS could probably be found in your book. I am including an excel sheet that would show ...