Co-operatives rental depreciation

[RightOn]

Is anyone here familiar with the depreciation of a co-operatives which is a rental property?

For a co-operatives, I know we depreciate the value of the stocks held by the owner, instead of the basis of the property.

I have followed the formula to calculate the basis of the stocks owned by the taxpayer in Pub 527. But the result is greater than what the taxpayer has actually paid to purchase the property. Is it possible or does that mean I have done something wrong in my calculation?

[Gary2]

Just reading the formula, it looks like the initial calculation can indeed be more than the actual cost - because in addition to buying shares in the corporation, they're also buying into the mortgage liability of the corporation. This is analogous to buying a property by paying cash and assuming an existing mortgage.

But then there's the sentence that the depreciation deduction cannot be more than the adjusted basis in the stock. I'm not sure whether this is saying that the basis in the stock is different from the basis just calculated (why would it be?) or is merely reasserting a basic theorem.

[RightOn]

Just reading the formula, it looks like the initial calculation can indeed be more than the actual cost - because in addition to buying shares in the corporation, they're also buying into the mortgage liability of the corporation. This is analogous to buying a property by paying cash and assuming an existing mortgage.
.

Thank you Gary. Yes, I did not think of the mortgage that they assumed. Great insight.

By using the formula in Publication 527, I think we come up with the depreciation basis of the cooperative. Now do we use Macrs 27.5 years to depreciate it? For some reason, it does not even mention the depreciation method that should be used.

[RightOn]

Hi Gary, if you are around, please give me a pointer as to what the correct depreciation method is for a rental co-operatives. Thank you.