Answer:
D) $2,645
Explanation:
Non residential real estate purchased before May 3, 1993 has to be amortized during a 31.5 year life. Real estate purchased and put in service after that date can be amortized in 39 years.
to calculate the cost recovery deduction we can use the following equation:
cost recovery reduction = (1 / 31.5) x $400,000 x (2.5 / 12) = 0.03174 x $400,000 x 0.2083 = $2,644.58 ≈ $2,645
