Kaskar Company,a calendar year taxpayer,paid $3,350,000 for a residential apartment complex and allocated $350,000 of the cost to the land and $3,000,000 of the cost to the building.Kaskar place the realty in service on September 29.Refer to the appropriate MACRS Table in Chapter 7 to compute Kaskar's first-year depreciation on the realty.

Question

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The residential apartment complex is depreciated over 27.5 years using the MACRS method. Since it was placed in service in September, the mid-month convention applies. The first-year depreciation is calculated as $3,000,000 x (1/27.5) x (3.5/12) = $31,830.

Kaskar Company,a Calendar Year Taxpayer,paid $3,350,000 for a Residential Apartment