Brent purchases a new warehouse building on May 16, 2017, for $6,000,000 (exclusive of the cost of the land). What is Brent's 2018 depreciation deduction?
A)$- 0 -
B)$76,924
C)$153,840
D)$119,040
E)$400,000

Question

Quizplus · Accepted Answer

To calculate the depreciation deduction, we need to know the depreciable basis of the property, the useful life of the property and the depreciation method to be used. Assuming a 39-year useful life and that the property is not eligible for bonus depreciation, we can calculate the depreciation deduction using the straight-line method as follows:

Depreciable basis = purchase price - land value
Depreciable basis = $6,000,000
Depreciation deduction = Depreciable basis / Useful life
Depreciation deduction = $153,840 ($6,000,000 / 39)

Brent Purchases a New Warehouse Building on May 16, 2017