Lindale Rentals places an apartment building in service on November 22,2013.The building's depreciable basis is $3,300,000.What is Lindale Homes' 2013 depreciation deduction on the property?

Question

Quizplus · Accepted Answer

The depreciation deduction for the year of the property placed in service should be calculated using the mid-month convention, which assumes that the property was placed in service in the middle of the month. In this case, the building was placed in service on November 22, 2013, which means that only one month of depreciation should be taken for 2013.

To calculate the monthly depreciation, we need to determine the property's recovery period and depreciation method. Residential rental property like an apartment building is generally depreciated over 27.5 years using the straight-line method. Using these rates, we can calculate the monthly depreciation as:
($3,300,000 / 27.5 years) / 12 months = $10,015.27/month

Since the property was placed in service on November 22, 2013, only one month of depreciation is allowed for that year, which gives us:
$10,015.27 x 1 month = $10,015.27

Therefore, the correct answer is B) $15,015.

Lindale Rentals Places an Apartment Building in Service on November