Brent purchases a new warehouse building on May 16,2015,for $6,000,000 (exclusive of the cost of the land).What is Brent's 2016 depreciation deduction?
A)$- 0 -
B)$76,924
C)$153,840
D)$119,040
E)$400,000

Question

Quizplus · Accepted Answer

The depreciation method for commercial real estate is generally straight-line and the depreciable life is 39 years (or 27.5 years for residential real estate). Using straight-line depreciation, the annual depreciation would be $6,000,000 / 39 = $153,846. However, since the building was purchased on May 16, 2015, only a partial year's depreciation is allowed in 2015. Therefore, for 2016, the depreciation deduction would be $153,846 - (5/12 x $153,846) = $119,040. Therefore, the correct answer is C.

Brent Purchases a New Warehouse Building on May 16,2015,for $6,000,000