Question

In August 2016, Richard purchased and placed in service an office building costing $753,000, including $134,000 for the land. The amount of depreciation Richard may claim in 2016 is __________.

Answer 1

Only the building is depreciable

so the depreciable portion is $753,000 less $134,000 land, for a net of $619,000

The MACRS rules (Modified Accelerated Cost Recovery System ) provide a 39-year life, straight-line depreciation, and a "mid-month" acquisition convention that treats the property as acquired in the middle of the month, regardless of the actual date of acquisition.

Therefore, the August 1, Year 2016, service date provides a half-month's depreciation for August, plus a full month for September through December, for a total of 4.5 months for Year 2016. $619,000 /39 years) × (4.5/12) = $5,952.