On November 30, 2011, Constance purchased an apartment building for $750,000. Determine her depreciation deduction for 2011

To determine Constance's depreciation deduction for 2011, we need to know the useful life of the apartment building and the depreciation method she is using.

1. Useful Life: The useful life refers to the period over which the building will be depreciated. It is typically determined based on the asset's expected lifespan. Common useful life estimates for buildings range from 27.5 years for residential rental property to 39 years for commercial property.

2. Depreciation Method: There are different methods for calculating depreciation, but the most commonly used method for residential rental property is the Modified Accelerated Cost Recovery System (MACRS). MACRS uses the General Depreciation System (GDS) for most property.

Once we know the useful life and depreciation method, we can calculate the depreciation deduction for 2011 using the following steps:

Step 1: Determine the Depreciable Basis
The depreciable basis is the cost of the apartment building minus the value of the land. Since the cost of the building is $750,000, we need to subtract the value of the land from this amount. Let's assume the land value is $200,000, so the depreciable basis would be $750,000 - $200,000 = $550,000.

Step 2: Determine the Annual Depreciation
Using the useful life and depreciation method, we can consult the IRS depreciation tables to determine the annual depreciation rate. Let's assume a useful life of 27.5 years for residential rental property and using MACRS, the annual depreciation rate would be 3.6364%.

Step 3: Calculate the Depreciation Deduction for 2011
To calculate Constance's depreciation deduction for 2011, multiply the depreciable basis by the annual depreciation rate:
$550,000 x 3.6364% = $20,000.

Therefore, Constance's depreciation deduction for 2011 would be $20,000.