C Corp. Depreciation

[Bird Legs]

Corp., Fiscal Year 7/1/04 ending 6/30/05, makes an improvement to bldg. owned by corp.
costing $2600. This improvement was made on 7/5/04. On 5/25/05 the corp. sold the
building.
Problem. My 2004 tax program calculated depreciation of $54. on this improvement, even
though it was sold with in the same FY that the improvement was made.
My understanding is that if equip. or bldg. is placed in service and then sold within
the same year that no depreciation would be deducted.
Am I correct or am I still not thinking straight?

[Gretel]

Depreciation

Good question. TTB pg. 9-12 and Pub.946 say "same year".

No specifics as to calendar year or fiscal year. Let's wait for Bees or Armando.

[Bees Knees]

Regulation Section 1.168(i)-4(c) says: “No depreciation deduction is allowable for MACRS property placed in service and disposed of in the same taxable year.”

[Matt Sova]

Depreciation is taken

The item in question is probably MACRS 39 which is really straight-line depreciation. Therefore, the depreciation is taken even though the item was sold in the same year it was purchased.

If it was 3, 5, 7, 10, 15 or 20 year property than no depreciation would be allowed.

Matt

[Bird Legs]

Matt, you

are correct. It is 39 yrs. property. Am still not thinking clearly from having the shingles.
Your answer is greatly appreciated.