Placid Places Incorporated, a calendar year taxpayer, purchased an apartment building on October 1 of the current year for $1,200,000, of which $200,000 was allocable to the land.The corporation's depreciation for the building for the year will be the product of the building's basis and

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For a residential rental property like an apartment building, the IRS allows depreciation over a 27.5-year useful life. Since the property was purchased on October 1, depreciation can only be taken for the months of October, November, and December, which is 3 months or 2.5/12 of a year. Therefore, the correct calculation is the building's basis times 1/27.5 (for the 27.5-year useful life) and then times 2.5/12 (for the 3 months of depreciation).

Placid Places Incorporated, a Calendar Year Taxpayer, Purchased an Apartment