A partnership, Green Acres LLC, purchased a residential rental property for $1,500,000 on April 1, 2020. The land was valued at $300,000. What is the maximum MACRS depreciation deduction for this property in 2023? (Residential rental property uses a 27.5-year recovery period and the mid-month convention. Use the appropriate IRS table percentage for the 4th year of a 27.5-year property placed in service in April: 3.636%)

Correct answer: D. $36,360

First, determine the depreciable basis: $1,500,000 (total cost) - $300,000 (land value) = $1,200,000. Second, identify the year of depreciation. The property was placed in service in April 2020. So, 2020 is Year 1, 2021 is Year 2, 2022 is Year 3, and 2023 is Year 4. The MACRS rate for the 4th year of a 27.5-year property placed in service in April is 3.636%. Therefore, the depreciation deduction for 2023 is $1,200,000 * 0.03636 = $43,632. No, the question provides a rate of 3.636% for the 4th year. $1,200,000 * 0.03636 = $43,632. Let me re-evaluate. The options are $36,360, $43,632, $49,091, $54,545. The correct calculation is $1,200,000 * 3.636% = $43,632. So the answer is B. My apologies for the earlier miscalculation. Let's re-do the explanation to match B.