Final answer:
To calculate the second year MACRS depreciation for Toni's apartment building, use the standard percentage from the MACRS table for residential rental property, which is around 3.636% of the building's purchase price. The calculation for this example results in a second year depreciation amount of $10,908.
Step-by-step explanation:
Toni purchased an apartment building and needs to calculate the second year MACRS depreciation for the property. Under the Modified Accelerated Cost Recovery System (MACRS), residential rental property is depreciated over 27.5 years using the straight-line method with a mid-month convention.
Since the property was placed in service in May of the first year, we would use the MACRS depreciation tables for residential real estate, which provide a specific percentage to be applied for each month of the year in the first year and standard percentages for the following years.
In the second year of service, we refer to the MACRS table, which indicates the percentage for the second year.
For this specific case, we do not have a specific depreciation table provided, but generally, the second year's depreciation percentage for residential rental property under MACRS is around 3.636%.
Thus, we would perform the following calculation:
Second Year Depreciation = Purchase Price of the Apartment Building × Depreciation Percentage
= $300,000 × 3.636%
= $10,908
This amount would be Toni's MACRS depreciation for the second year.