Question

LCD Corporation purchased non-residential real property for $380000 (exclusive of land cost) and placed it in service on August 6, 2022. Compute MACRS depreciation on the property for 2022. [For your answer, please use whole number (no need to round) and ignore the dollar sign and the comma.]

Answer 1

The MACRS depreciation for LCD Corporation's non-residential real property purchased for $380,000 and placed in service on August 6, 2022, is 9352 for the year 2022, calculated using the mid-month convention at a rate of 2.461% for the first year.

Step-by-step explanation:

To compute the MACRS depreciation for LCD Corporation's non-residential real property that was placed in service on August 6, 2022, we need to use the Modified Accelerated Cost Recovery System (MACRS) guidelines provided by the Internal Revenue Service (IRS). For non-residential real property, the recovery period is 39 years under the straight-line method. Since the property was placed in service partway through the year, we use the mid-month convention, which assumes the property was in service for half of August. For the first year, the depreciation percentage is 2.461% of the property's depreciable basis. Thus, the depreciation expense for 2022 is calculated as follows:

• $380,000 (Cost of Property) x 2.461% (Depreciation Rate for First Year) = $9,351.80

However, as instructed, you should write this amount in a whole number, so the MACRS depreciation for 2022 would be 9352 without the dollar sign and comma.