Question

In 2016, Oliver Co. purchased a business-use asset for $100,000. The asset has a 5-year ACS GDS recovery period and is depreciated under MACRS GDS (no SL election). The asset was placed in service on October 10, 2016. This was the only asset that Oliverio. placed in service in 2016. Oliver Co. did not elect Section 179 deduction and elected out of Section 168(k) bonus depreciation. Oliver Co. sold the asset on February 1, 2019. What is the Oliver Co. depreciation deduction for 2019 (year 4)?

Answer 1

In the year of sale of the building placed in service,
the property (exempted land value) is depreciable
on monthly basis and the property which is sold
in the month of February is subject to depreciation
for the period of 2 months ie. 0.455%.
Oliver's tax depreciation deduction for 2019 =
Business use asset $100000 * dep. Rate 0.455%
= 100000 * 0.455% = 455

Note:-

Depreciation on a smaller percentage that year, depending on when it was put in service. For sold out case, consider the GDS table on reverse side. According to the IRS Residential Rental Property GDS table:

January	3.485%
February	3.182%
March	2.879%
April	2.576%
May	2.273%
June	1.970%
July	1.667%
August	1.364%
September	1.061%
October	0.758%
November	0.455%
December	0.152%