Question 1

Useful lives for realty include all of the following except:

Accepted Answer

A) 25 years 
B) 27.5 years 
C) 39 years 
D) 40 years 
A) 25 years 
B) 27.5 years 
C) 39 years 
D) 40 years A

Question 2

MACRS means

Accepted Answer

A) Modified asset cost recovery system 
B) Mid-year accelerated cost recovery system 
C) Modified accelerated cost recovery system 
D) Modified accelerated conventional recovery system 
A) Modified asset cost recovery system 
B) Mid-year accelerated cost recovery system 
C) Modified accelerated cost recovery system 
D) Modified accelerated conventional recovery system C

Question 3

13 Bonus depreciation and Section 179 expensing are never taken on the same asset.

Accepted Answer

A) True 
 B)False  False

Question 4

When fully depreciating 5-year property, the final year of depreciation will be year:

Accepted Answer

A) 6 
B) 5 
C) 4 
D) 3 
A) 6 
B) 5 
C) 4 
D) 3

Question 5

Sanjuro Corporation (a calendar-year corporation) purchased and placed in service the following assets during 2019: $\begin{array}{lcr}
\underline{\text {Date Acquired}}&
\underline{\text {Asset Description}}&
\underline{\text {Cost}}\
\text { February 18}& \text { Warehouse Building } & \$ 2,450,000 \
 \text { June 2 }  & \text { Automobile } & 30,000 \
\text { August } 18& \text { Computer Equipment } & 220,000 \
\text { September } 20  & \text { Machinery } & 1,050,000 \
\text { December } 15& \text { Office Equipment } & 885,000
\end{array}$
 All assets are used 100% for business use.The warehouse building does not include the cost of the land on which it is located which was an additional $1,000,000.The corporation has $3,000,000 income from operations before calculating depreciation deductions.Sanjuro Corporation made whatever elections were necessary to maximize its overall depreciation deduction for 2019.What was Sanjuro Corporation's cost recovery deduction for the warehouse in 2019?

Accepted Answer

A) $55,052 
B) $60,295 
C) $70,536 
D) $77,959 
A) $55,052 
B) $60,295 
C) $70,536 
D) $77,959

Question 6

On June, 20, 2019, Simon Corporation (a calendar-year corporation) purchased and placed in service a new automobile costing $68,000.This vehicle is used 100% for business.Simon makes whatever elections are necessary to maximum its overall depreciation deduction for the year of acquisition. What would be Simon Corporation's cost recovery deduction for the automobile for 2020?

Accepted Answer

A) $0 
B) $15,968 
C) $16,100 
D) $18,100 
A) $0 
B) $15,968 
C) $16,100 
D) $18,100

Question 7

The basis in property acquired by inheritance is normally its fair market value at the date of the
decedent's death.

Accepted Answer

A) True 
 B)False

Question 8

YumYum Corporation (a calendar-year corporation) moved into a new office building adjacent to its manufacturing plant in 2019.It purchased and placed in service the following assets during 2019: $\begin{array}{ccr}
\underline{\text {Date Acquired}}&
\underline{\text {Asset Description}}&\underline{\text {Cost}}\
\text { March 4 } & \text { New Office Building } & \$ 850,000 \
\text { March 15 } & \text { New Computer Equipment } & 45,000 \
\text { March 25 } & \text { New Office Furniture } & \$ 25,000 \
\text { August 20 } & \text { Used Machinery } & \$ 120,000 \
\text { December 15 } & \text { New Automobile } & \$ 30.000
\end{array}$

All assets are used 100% for business use.The office building does not include the cost of the land on which it is located that was an additional $300,000.The corporation had $900,000 income from operations before calculating depreciation deductions.What is the maximum Section 179 deduction YumYum can claim for 2019?

Accepted Answer

A) $500,000 
B) $253,160 
C) $208,100 
D) $25,000 
A) $500,000 
B) $253,160 
C) $208,100 
D) $25,000

Question 9

The cost of assets with useful lives expected to extend for 2 or more years are capitalized with costs allocated over their useful lives.

Accepted Answer

A) True 
 B)False

Question 10

The after-tax cost of a depreciable asset is dependent on the purchaser's marginal tax rate.

Accepted Answer

A) True 
 B)False

Question 11

On October 12, 2019, Wilson Corporation (a calendar-year taxpayer) acquires 5-year property for $9,000.This is the only property acquired this year and neither Section 179 expensing nor bonus depreciation were claimed.What is Wilson's total depreciation deduction for 2019?

Accepted Answer

A) $1,800 
B) $1,350 
C) $900 
D) $450 
A) $1,800 
B) $1,350 
C) $900 
D) $450

Question 12

When fully depreciating 7-year property, the final year of depreciation will be year:

Accepted Answer

A) 5 
B) 6 
C) 7 
D) 8 
A) 5 
B) 6 
C) 7 
D) 8

Question 13

Sanjuro Corporation (a calendar-year corporation) purchased and placed in service the following assets during 2019: $\begin{array}{lcr}
\underline{\text {Date Acquired}}&
\underline{\text {Asset Description}}&
\underline{\text {Cost}}\
\text { February 18}& \text { Warehouse Building } & \$ 2,450,000 \
 \text { June 2 }  & \text { Automobile } & 30,000 \
\text { August } 18& \text { Computer Equipment } & 220,000 \
\text { September } 20  & \text { Machinery } & 1,050,000 \
\text { December } 15& \text { Office Equipment } & 885,000
\end{array}$

All assets are used 100% for business use.The warehouse building does not include the cost of the land on which it is located which was an additional $1,000,000.The corporation has $3,000,000 income from operations before calculating depreciation deductions.Sanjuro Corporation made whatever elections were necessary to maximize its overall depreciation deduction for 2019.
What would be Sanjuro Corporation's cost recovery deduction for the office equipment for 2020?

Accepted Answer

A) $0 
B) $129,797 
C) $442,500 
D) $18,000 
A) $0 
B) $129,797 
C) $442,500 
D) $18,000

Question 14

Sanjuro Corporation (a calendar-year corporation) purchased and placed in service the following assets during 2019: $\begin{array}{lcr}
\underline{\text {Date Acquired}}&
\underline{\text {Asset Description}}&
\underline{\text {Cost}}\
\text { February 18}& \text { Warehouse Building } & \$ 2,450,000 \
 \text { June 2 }  & \text { Automobile } & 30,000 \
\text { August } 18& \text { Computer Equipment } & 220,000 \
\text { September } 20  & \text { Machinery } & 1,050,000 \
\text { December } 15& \text { Office Equipment } & 885,000
\end{array}$

All assets are used 100% for business use.The warehouse building does not include the cost of the land on which it is located which was an additional $1,000,000.The corporation has $3,000,000 income from operations before calculating depreciation deductions.Sanjuro Corporation made whatever elections were necessary to maximize its overall depreciation deduction for 2019.
What would be Sanjuro Corporation's maximum cost recovery deduction for the warehouse for 2020?

Accepted Answer

A) $62,818 
B) $55,052 
C) $49,809 
D) $44,566 
A) $62,818 
B) $55,052 
C) $49,809 
D) $44,566

Question 15

Coralbay, a calendar-year corporation, purchased used office furniture for $240,000 and new machines for $1,880,000 in July 2019.What is Coralbay's maximum cost recovery deduction for 2019?

Accepted Answer

A) $240,000 
B) $510,000 
C) $1,000,000 
D) $2,120,000 
A) $240,000 
B) $510,000 
C) $1,000,000 
D) $2,120,000

Question 16

The MACRS life for all realty is 27½ years.

Accepted Answer

A) True 
 B)False

Question 17

The adjusted basis of an asset is:

Accepted Answer

A) Its acquisition price only 
B) Acquisition cost less cost recovery 
C) Acquisition cost less selling price 
D) Only the cash used to purchase the asset 
A) Its acquisition price only 
B) Acquisition cost less cost recovery 
C) Acquisition cost less selling price 
D) Only the cash used to purchase the asset

Question 18

YumYum Corporation (a calendar-year corporation) moved into a new office building adjacent to its manufacturing plant in 2019.It purchased and placed in service the following assets during 2019: $\begin{array}{ccr}
\underline{\text {Date Acquired}}&
\underline{\text {Asset Description}}&\underline{\text {Cost}}\
\text { March 4 } & \text { New Office Building } & \$ 850,000 \
\text { March 15 } & \text { New Computer Equipment } & 45,000 \
\text { March 25 } & \text { New Office Furniture } & \$ 25,000 \
\text { August 20 } & \text { Used Machinery } & \$ 120,000 \
\text { December 15 } & \text { New Automobile } & \$ 30.000
\end{array}$

All assets are used 100% for business use.The office building does not include the cost of the land on which it is located that was an additional $300,000.The corporation had $900,000 income from operations before calculating depreciation deductions.YumYum Corporation made any elections available to maximize its overall depreciation deduction for 2019.What is its maximum depreciation deduction on the new automobile in 2019?

Accepted Answer

A) $10,000 
B) $11,160 
C) $18,100 
D) $30,000 
A) $10,000 
B) $11,160 
C) $18,100 
D) $30,000

Question 19

Momee Corporation, a calendar-year corporation, bought only one asset in 2014, a crane it purchased for $700,000 on November 24.It disposed of the asset in April, 2019.What is its depreciation deduction for this asset in 2019 if cost recovery was determined using only regular MACRS?

Accepted Answer

A) $62,510 
B) $61,110 
C) $31,255 
D) $22,916 
A) $62,510 
B) $61,110 
C) $31,255 
D) $22,916

Question 20

If more than 40 percent of all personalty purchased during the year is placed in service during the last quarter of the year, the mid-quarter convention must be used.

Accepted Answer

A) True 
 B)False

Useful lives for realty include all of the following except:

MACRS means

13 Bonus depreciation and Section 179 expensing are never taken on the same asset.

When fully depreciating 5-year property, the final year of depreciation will be year:

The basis in property acquired by inheritance is normally its fair market value at the date of the decedent's death.

The cost of assets with useful lives expected to extend for 2 or more years are capitalized with costs allocated over their useful lives.

The after-tax cost of a depreciable asset is dependent on the purchaser's marginal tax rate.

On October 12, 2019, Wilson Corporation (a calendar-year taxpayer) acquires 5-year property for $9,000.This is the only property acquired this year and neither Section 179 expensing nor bonus depreciation were claimed.What is Wilson's total depreciation deduction for 2019?

When fully depreciating 7-year property, the final year of depreciation will be year:

Coralbay, a calendar-year corporation, purchased used office furniture for $240,000 and new machines for $1,880,000 in July 2019.What is Coralbay's maximum cost recovery deduction for 2019?

The MACRS life for all realty is 27½ years.

The adjusted basis of an asset is:

Momee Corporation, a calendar-year corporation, bought only one asset in 2014, a crane it purchased for $700,000 on November 24.It disposed of the asset in April, 2019.What is its depreciation deduction for this asset in 2019 if cost recovery was determined using only regular MACRS?

If more than 40 percent of all personalty purchased during the year is placed in service during the last quarter of the year, the mid-quarter convention must be used.

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Deductions for Individuals and Tax Determination

Business Expenses

Property Dispositions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Estates, Gifts, and Trusts

Filters

Exam 7: Property Acquisitions and Cost Recovery Deductions

Useful lives for realty include all of the following except:

MACRS means

13 Bonus depreciation and Section 179 expensing are never taken on the same asset.

When fully depreciating 5-year property, the final year of depreciation will be year:

The basis in property acquired by inheritance is normally its fair market value at the date of the decedent's death.

The cost of assets with useful lives expected to extend for 2 or more years are capitalized with costs allocated over their useful lives.

The after-tax cost of a depreciable asset is dependent on the purchaser's marginal tax rate.

On October 12, 2019, Wilson Corporation (a calendar-year taxpayer) acquires 5-year property for $9,000.This is the only property acquired this year and neither Section 179 expensing nor bonus depreciation were claimed.What is Wilson's total depreciation deduction for 2019?

When fully depreciating 7-year property, the final year of depreciation will be year:

Coralbay, a calendar-year corporation, purchased used office furniture for $240,000 and new machines for $1,880,000 in July 2019.What is Coralbay's maximum cost recovery deduction for 2019?

The MACRS life for all realty is 27½ years.

The adjusted basis of an asset is:

Momee Corporation, a calendar-year corporation, bought only one asset in 2014, a crane it purchased for $700,000 on November 24.It disposed of the asset in April, 2019.What is its depreciation deduction for this asset in 2019 if cost recovery was determined using only regular MACRS?

If more than 40 percent of all personalty purchased during the year is placed in service during the last quarter of the year, the mid-quarter convention must be used.

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Deductions for Individuals and Tax Determination

Business Expenses

Property Dispositions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Estates, Gifts, and Trusts

Filters