The improvements would be added to the basis of the property as opposed to being expensed.
For the depreciation, you would divide the cost basis ($158,657) by 39 to get the depreciation for one year. Then, divide that by twelve to get the depreciation for one month, then multiply that by the number of months you owned the property in the year of sale.
The depreciation on the $50,000 improvement would be calculated separately. Divide it by 39, then by 12, then multiply it by the number of months held in the current year.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
