Asked by Lizbeth RamosPerdomo on Jun 29, 2024

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On June 1 of the current year,Jack and Angie purchased a rental beach house for $900,000 and rented it right away.Of that amount,$600,000 was for the land value.How much depreciation deduction can Jack and Angie take in the current year? (You may need to refer to the depreciation tables. )

A) $11,820
B) $10,909
C) $5,910
D) $17,730

Depreciation Deduction

A tax deduction that allows a taxpayer to recover the cost of property or assets that have a useful life beyond the tax year, by spreading the cost over the life of the property.

Depreciation Tables

Charts provided by the IRS to assist taxpayers in calculating the depreciation expense of an asset for tax purposes over its useful life.

  • Comprehend the regulations governing depreciation for rental properties.
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KU
Kevin UlmerJul 02, 2024
Final Answer :
C
Explanation :
Since the purchase was made in the current year, the mid-quarter convention shall be applied. Therefore, the depreciation rate would be 1.5% (from Table A-6) multiplied by 40% (building value, which is $300,000).

Depreciation deduction = [(900,000-600,000) x 40%] x 1.5% = $5,910.

Hence, the correct answer is C.