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5) On 30 June 2019, ABC LLC placed into service a building used as a retail...

5) On 30 June 2019, ABC LLC placed into service a building used as a retail location with an initial basis of $275,000. Further, ABC did not elect 179 expensing and elected out of bonus depreciation (no 179 or bonus). Determine the depreciation deduction for the building for 2019.

FOR TAX YEAR 20109

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Answer #1

Per IRS, the building would be classified as a Non-residential real property because it is used as a retail location and hence would be depreciated over a period of 39 years. Also, we will use the Mid month convention to depreciation the building. Under this convention any asset placed in service or disposed off during the month would be considered to have been in service for 50% during the particular month.

The Depreciation expense for the Building during the year is :-

=$275,000 * 1.391%

=$3,825.25

Depreciation expense for the Building for 2019 = $3,825(Rounded)

Please let me know if you have any questions via comments and all the best :)

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