A 40-unit apartment building is placed into service on August 15, 2013 at a cost of $1,000,000. The apartments will rent for $850-$1200 per month. The owners sell the apartment building on June 1, 2017 for $850,000.
a) Find the depreciation deduction and unrecovered investment (Book Value) for each tax year involved.
b) What is the difference between the Book Value and the sales price in 2017?
c) What taxes will the owners owe, (or what tax credit will they receive) due to the sale in 2017?
(Assume tax rate = 40%)
d) If the apartments were sold for $950,000, ) What taxes will the owners owe, (or what tax credit will they receive) due to the sale in 2017