Final answer:
Poplock LLC can depreciate the building portion of the property purchased at $275,000 using a straight-line method over 39 years, with a prorated amount for the first year since it was placed in service partway through the year. The maximum depreciation for the first year, rounded to the nearest whole number, would be $3,527.
Step-by-step explanation:
When Poplock LLC purchased a warehouse and land, only the cost allocated to the building portion is depreciable since land cannot be depreciated. Based on the value attributed to the building ($275,000), the company will need to follow the Modified Accelerated Cost Recovery System (MACRS) which is the current method of depreciation for the property placed in service in the United States. For non-residential real estate under MACRS, the property is typically depreciated over a 39-year straight-line method.
However, since the property was placed in service partway through the year, the allowable depreciation for the first year is prorated. As the property came into use in August, under the half-year convention, it is treated as though it was in service for half of the year. Thus, the depreciation for the first-year would be calculated as $275,000 divided by 39 years, multiplied by 0.5 (for half a year). This results in a depreciation expense of $3,527 for the first year, rounded to the nearest whole number.