Brent purchases a new warehouse building on May 16,2016,for $6,000,000 (exclusive of the cost of the land).What is Brent's 2017 depreciation deduction?
A)$- 0 -
B)$76,924
C)$153,840
D)$119,040
E)$400,000

Question

Quizplus · Accepted Answer

The depreciation for commercial real estate is calculated using the Modified Accelerated Cost Recovery System (MACRS) over a period of 39 years. Using the straight-line method, the annual depreciation expense for the building would be $6,000,000 / 39 years = $153,846. However, assuming the building was purchased on May 16, 2016, the depreciation deduction for 2016 would only be for a partial year, and therefore would be $153,846 x 230/366 = $96,923. For 2017, the full year depreciation deduction would be $153,846.

Brent Purchases a New Warehouse Building on May 16,2016,for $6,000,000