Question

On March 8, 2018, Holly purchased a residential apartment building. The cost basis assigned to the building is $195,400. Holly also owns another residential apartment building that she purchased on April 15, 2018, with a cost basis of $738,000.

Click here to access the depreciation tables.

If required, round intermediate calculations and final answers to nearest dollar.

a. Calculate Holly's total depreciation deduction for the apartments for 2018 using MACRS.
$

b. Calculate Holly's total depreciation deduction for the apartments for 2019 using MACRS.
$

Answer 1

a. Date of purchase = March 8, 2018

March month of Year 1 of table Residential Rental Property - GDS is 2.879%.
MACRS depreciation for this apartment in 2018 = 2.879% * $195,400 = $5,625.57

Date of purchase = April 15, 2018

April month of Year 1 of table Residential Rental Property - GDS is 2.576%

MACRS depreciation for this apartment in 2018 = 2.576% * $738,000 = $19,010.88

Total depreciation deduction for 2018 = $5,625.57 + $19,010.88 = $24,636.45

b. Both residential apartment building must have been used for the whole year in 2019.

January month of Year 2 of table Residential Rental Property - GDS is 3.636%.
Depreciation for 2019 = (3.636% * $195,400) + (3.636% * $738,000) = $7,104.74 + $26,833.68 = $33,938.42