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

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.

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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)

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