Riverview Incorporated, a calendar year taxpayer, purchased an apartment building on June 1 last year for $1,200,000, of which $200,000 was allocable to the land.The corporation sold the property on June 27 of the current year.The corporation's depreciation for the building for the current year will be approximately

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The correct depreciation for the building for the current year would be approximately $16,665. This is calculated by first subtracting the land value from the total purchase price ($1,200,000 - $200,000 = $1,000,000) to get the depreciable basis of the building. Then, using the Modified Accelerated Cost Recovery System (MACRS) for residential rental property, which has a recovery period of 27.5 years, the annual depreciation is approximately $36,364 ($1,000,000 / 27.5). Since the property was sold before the end of the year, the depreciation for the current year is prorated for the period it was in service (from January 1 to June 27, approximately 5.9 months). Thus, $36,364 * (5.9 / 12) = approximately $16,665.

Riverview Incorporated, a Calendar Year Taxpayer, Purchased an Apartment Building