MACRS and ADS, Real Property
Response to the following problem:
Drew operates a business as a sole proprietorship. On January 3, 2014, Drew placed in service a warehouse costing $650,000. On November 25, 2014, he placed in service an apartment complex costing $990,000.
a. Compute Drew's 2014 depreciation expense on each building. Drew uses MACRS to depreciate the warehouse and elects to use ADS to depreciate the apartment building.
b. Same as in Part a., except that Drew elects to depreciate the warehouse using ADS and uses MACRS to depreciate the apartment building
c. Same as in Part a., except that Drew uses MACRS to depreciate both buildings.