NRW Company, a calendar year taxpayer, purchased a residential apartment complex for $5.8 million and allocated $1 million cost to the land and $4.8 million cost to the building. NRW placed the realty in service on August 2, 2016.
a. Compute NRW's MACRS depreciation with respect to the realty for 2016 and 2017.
b. Compute NRW's adjusted basis in the land and building on December 31, 2017.
c. How would your answer to a. change if the building was a manufacturing plant instead of an apartment complex?

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The Answer of NRW Company, a calendar year taxpayer, purchased a residential apartment complex for $5.8 million and allocated $1 million cost to the land and $4.8 million cost to the building. NRW placed the realty in service on August 2, 2016.
a. Compute NRW's MACRS depreciation with respect to the realty for 2016 and 2017.
b. Compute NRW's adjusted basis in the land and building on December 31, 2017.
c. How would your answer to a. change if the building was a manufacturing plant instead of an apartment complex?

NRW Company, a Calendar Year Taxpayer, Purchased a Residential Apartment