Issuers with lower credit ratings (e.g., BB) must offer higher coupon rates to compensate investors for the increased risk of default. How to calculate coupon rate is also important for the issuers to manage the bond’s value. In conclusion, calculating the coupon rate of a bond is a crucial step in bond investing. By understanding the concept of a coupon…
Your depreciation deduction for the second year is $1,900 ($4,750 × 0.40). You reduce the adjusted basis ($288) by the depreciation claimed in the fourth year ($115) to get the reduced adjusted basis of $173. You multiply the reduced adjusted basis ($173) by the result (66.67%). Figure your depreciation deduction for the year you place the property in service by…