. As described, residential rental property is depreciated over 27.5, straight line, mid-month convention.

1. What does mid-month convention mean? If you are not sure answer the other questions first.

1. Complete the attached spreadsheet using formulas only.

1. Comment on the table on the bottom of page 11 of Publication 527 and on the example:

Example. You purchased a single family rental house for $185,000 and placed it in service on February 8. The sales contract showed that the building cost $160,000 and the land cost $25,000. Your basis for depreciation is its original cost, $160,000. This is the first year of service for your residential rental property and you decide to use GDS, which has a recovery period of 27.5 years. Using Table 2-2d, you find that the depreciation percentage for property placed in service in February of Year 1 is 3.182%. That year's depreciation deduction is $5,091 ($160,000 x 3.182% (0.03182)).

1. comment on what you learned while doing this problem.