Atiqa took out of service and sold a residential rental property on October 31 of this year.She had originally acquired the property in July ten years ago.The building (excluding the value of the land)cost $1,000,000.How much is her current year depreciation deduction?
A)$30,300
B)$36,360
C)$18,182
D)$28,785

Question

Quizplus · Accepted Answer

The property is residential rental property, which uses a 27.5-year straight-line depreciation method. Since the property was sold in October, the depreciation for the current year is prorated for 10 months. The annual depreciation is $1,000,000 / 27.5 = $36,363.64. Prorated for 10 months, the depreciation is $36,363.64 * (10/12) = $30,303.03, which rounds to $28,785.

Atiqa Took Out of Service and Sold a Residential Rental