Lindale Rentals places an apartment building in service on November 22, 2018. The building's depreciable basis is $3,300,000. What is Lindale Homes' 2018 depreciation deduction on the property?

Question

Quizplus · Accepted Answer

To calculate the 2018 depreciation, we need to use the Modified Accelerated Cost Recovery System (MACRS) with a 27.5-year recovery period for residential rental property.

The depreciation deduction for 2018 is calculated as:
Depreciation = (Cost basis / Recovery period) x Time factor
Time factor for 2018 = 3.636% (from MACRS table)

Depreciation = ($3,300,000 / 27.5) x 3.636% = $15,015

Therefore, Lindale Rentals' 2018 depreciation deduction for the apartment building is $15,015 (option B).

Lindale Rentals Places an Apartment Building in Service on November