On June 1 of the current year,Jack and Angie purchased a rental beach house for $900,000 and rented it right away.Of that amount,$600,000 was for the land value.How much depreciation deduction can Jack and Angie take in the current year? (You may need to refer to the depreciation tables. )

Question

Quizplus · Accepted Answer

Since the purchase was made in the current year, the mid-quarter convention shall be applied. Therefore, the depreciation rate would be 1.5% (from Table A-6) multiplied by 40% (building value, which is $300,000).

Depreciation deduction = [(900,000-600,000) x 40%] x 1.5% = $5,910.

Hence, the correct answer is C.

On June 1 of the Current Year,Jack and Angie Purchased