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. Use Table 7-3.

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The residential real estate is depreciated over 27.5 years using the straight-line method under MACRS. Since the property 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