Question 1

An election to use straight-line under ADS is made on an asset-by-asset basis for property other than eligible real estate.

Accepted Answer

A) True 
 B)False

Question 2

On March 1, 2018, Lana leases and places in service a passenger automobile. The lease will run for five years and the payments are $500 per month. During 2018, she uses her car 60% for business and 40% for personal activities. Assuming the dollar amount from the IRS table for auto leases is $70, determine Lana's gross income attributable to the lease.

Accepted Answer

A)  $0 
B)  $35 
C)  $59 
D)  $70 
E)  None of the above 
A)  $0 
B)  $35 
C)  $59 
D)  $70 
E)  None of the above

Question 3

Once the more-than-50% business usage test is passed for listed property, it still matters if the business usage for the property drops to 50% or less during the recovery period.

Accepted Answer

A) True 
 B)False

Question 4

The basis of cost recovery property must be reduced by at least the cost recovery allowable.

Accepted Answer

A) True 
 B)False

Question 5

The § 179 limit for a sports utility vehicle with a GVW of 7,000 pounds will not apply if the sports utility vehicle is used as a taxi.

Accepted Answer

A) True 
 B)False

Question 6

Carlos purchased an apartment building on November 16, 2018, for $3,000,000. Determine the cost recovery for 2018.

Accepted Answer

A)  $9,630 
B)  $11,910 
C)  $13,950 
D)  $22,740 
E)  None of the above 
A)  $9,630 
B)  $11,910 
C)  $13,950 
D)  $22,740 
E)  None of the above

Question 7

Under MACRS, if the mid-quarter convention is applicable, all property sold is treated as being sold at the mid-point of the quarter in which it is placed in service.

Accepted Answer

A) True 
 B)False

Question 8

Goodwill associated with the acquisition of a business cannot be amortized.

Accepted Answer

A) True 
 B)False

Question 9

The factor for determining the cost recovery for eligible real estate under MACRS, in the year of disposition, is taken from the month of the disposition.

Accepted Answer

A) True 
 B)False

Question 10

Lindsey purchased a uranium interest for $10,000,000 on January 3, 2018, when recoverable reserves were estimated at 200,000 units. A total of 10,000 units were extracted in 2018 and 7,000 units were sold in 2018. Gross income from the property was $2,800,000 and taxable income without the allowance for depletion was $1,000,000. Determine her depletion deduction for 2018.

Accepted Answer

Cost depletion
@#LAT-DLM&
Percentage depletion
Les

Question 11

Which of the following depreciation conventions are not used under MACRS?

Accepted Answer

A)  Full-month. 
B)  Mid-month. 
C)  Half-year. 
D)  Mid-quarter. 
E)  All of the above are used under MACRS. 
A)  Full-month. 
B)  Mid-month. 
C)  Half-year. 
D)  Mid-quarter. 
E)  All of the above are used under MACRS.

Question 12

Intangible drilling costs must be capitalized and recovered through depletion.

Accepted Answer

A) True 
 B)False

Question 13

A used $35,000 automobile that is used 100% for business is placed in service in 2018. If the automobile fails the 50% business usage test in the second year, no cost recovery will be recaptured.

Accepted Answer

A) True 
 B)False

Question 14

Property which is classified as personalty may be depreciated.

Accepted Answer

A) True 
 B)False

Question 15

Discuss the tax implications of a seller allocating the selling price to goodwill or a covenant not to compete.

Accepted Answer

Goodwill is a capital asset and any gain

Question 16

Cost depletion is determined by multiplying the depletion cost per unit by the number of units sold.

Accepted Answer

A) True 
 B)False

Question 17

The § 179 deduction can exceed $1,000,000 in 2018 if the taxpayer had a § 179 amount which exceeded the taxable income limitation in the prior year.

Accepted Answer

A) True 
 B)False

Question 18

A taxpayer must use the alternative depreciation system ADS) to compute depreciation for earnings and profits.

Accepted Answer

A) True 
 B)False

Question 19

Under MACRS, which one of the following is not considered in determining depreciation for tax purposes?

Accepted Answer

A)  Cost of asset. 
B)  Property recovery class. 
C)  Half-year convention. 
D)  Salvage or residual) value. 
E)  None of the above. 
A)  Cost of asset. 
B)  Property recovery class. 
C)  Half-year convention. 
D)  Salvage or residual) value. 
E)  None of the above.

Question 20

Property used for the production of income is not eligible for § 179 expensing.

Accepted Answer

A) True 
 B)False

An election to use straight-line under ADS is made on an asset-by-asset basis for property other than eligible real estate.

Once the more-than-50% business usage test is passed for listed property, it still matters if the business usage for the property drops to 50% or less during the recovery period.

The basis of cost recovery property must be reduced by at least the cost recovery allowable.

The § 179 limit for a sports utility vehicle with a GVW of 7,000 pounds will not apply if the sports utility vehicle is used as a taxi.

Carlos purchased an apartment building on November 16, 2018, for $3,000,000. Determine the cost recovery for 2018.

Under MACRS, if the mid-quarter convention is applicable, all property sold is treated as being sold at the mid-point of the quarter in which it is placed in service.

Goodwill associated with the acquisition of a business cannot be amortized.

The factor for determining the cost recovery for eligible real estate under MACRS, in the year of disposition, is taken from the month of the disposition.

Which of the following depreciation conventions are not used under MACRS?

Intangible drilling costs must be capitalized and recovered through depletion.

A used $35,000 automobile that is used 100% for business is placed in service in 2018. If the automobile fails the 50% business usage test in the second year, no cost recovery will be recaptured.

Property which is classified as personalty may be depreciated.

Discuss the tax implications of a seller allocating the selling price to goodwill or a covenant not to compete.

Cost depletion is determined by multiplying the depletion cost per unit by the number of units sold.

The § 179 deduction can exceed $1,000,000 in 2018 if the taxpayer had a § 179 amount which exceeded the taxable income limitation in the prior year.

A taxpayer must use the alternative depreciation system ADS) to compute depreciation for earnings and profits.

Under MACRS, which one of the following is not considered in determining depreciation for tax purposes?

Property used for the production of income is not eligible for § 179 expensing.

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

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Exam 8: Depreciation, Cost Recovery, Amortization, and Depletion

An election to use straight-line under ADS is made on an asset-by-asset basis for property other than eligible real estate.

Once the more-than-50% business usage test is passed for listed property, it still matters if the business usage for the property drops to 50% or less during the recovery period.

The basis of cost recovery property must be reduced by at least the cost recovery allowable.

The § 179 limit for a sports utility vehicle with a GVW of 7,000 pounds will not apply if the sports utility vehicle is used as a taxi.

Carlos purchased an apartment building on November 16, 2018, for $3,000,000. Determine the cost recovery for 2018.

Under MACRS, if the mid-quarter convention is applicable, all property sold is treated as being sold at the mid-point of the quarter in which it is placed in service.

Goodwill associated with the acquisition of a business cannot be amortized.

The factor for determining the cost recovery for eligible real estate under MACRS, in the year of disposition, is taken from the month of the disposition.

Which of the following depreciation conventions are not used under MACRS?

Intangible drilling costs must be capitalized and recovered through depletion.

A used $35,000 automobile that is used 100% for business is placed in service in 2018. If the automobile fails the 50% business usage test in the second year, no cost recovery will be recaptured.

Property which is classified as personalty may be depreciated.

Discuss the tax implications of a seller allocating the selling price to goodwill or a covenant not to compete.

Cost depletion is determined by multiplying the depletion cost per unit by the number of units sold.

The § 179 deduction can exceed $1,000,000 in 2018 if the taxpayer had a § 179 amount which exceeded the taxable income limitation in the prior year.

A taxpayer must use the alternative depreciation system ADS) to compute depreciation for earnings and profits.

Under MACRS, which one of the following is not considered in determining depreciation for tax purposes?

Property used for the production of income is not eligible for § 179 expensing.

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

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