Alice purchases a rental house on August 22, 2017, for a cost of $174,000. Of this amount, $100,000 is considered to be allocable to the cost of the home, with the remaining $74,000 allocable to the cost of the land. What is Alice's maximum depreciation deduction for 2017 using MACRS?

a. $2,373

b. $1,970

c. $1,364

d. $1,061

e. $1,009

correct option is c. $1,364

Explanation:

given data

purchases house = $174,000

cost of the home = $100,000

cost of the land = $74,000

solution

we know that here MACRS depreciation deduction is here on the $100000

because home only residential real property

and land is not depreciated assets

so here depreciation rate is 1.364 %

so that maximum depreciation deduction allowed is = $100,000 * 1.364

maximum depreciation deduction allowed = 1364

so correct option is c. $1,364