Question 1

The alternative depreciation system requires both a slower method of recovery and longer recovery periods.

Accepted Answer

A) True 
 B)False

Question 2

Santa Fe purchased the rights to extract turquoise on a tract of land over a five-yearperiod. Santa Fe paid $300,000 for extraction rights. A geologist estimates that Santa Fe will recover 5,000 pounds of turquoise. During the current year, Santa Fe extracted 1,500 pounds of turquoise, which it sold for $200,000. What is Santa Fe's cost depletionexpense for the current year?

Accepted Answer

A)  $110,000 
B)  $90,000 
C)  $300,000 
D)  $60,000 
E)  None of the choices are correct. 
A)  $110,000 
B)  $90,000 
C)  $300,000 
D)  $60,000 
E)  None of the choices are correct.

Question 3

During August of the prior year, Julio purchased an apartment building that he used as a rental property. The basis was $1,400,000. Calculate the maximum depreciation expense during the current year. (Use MACRS Table 3 in the text)

Accepted Answer

$50,904
The asset's recovery p

Question 4

Which is not an allowable method under MACRS?

Accepted Answer

A)  Sum of the years digits 
B)  150 percent declining balance 
C)  200 percent declining balance 
D)  Straight line 
E)  All of the choices are allowable methods under MACRS. 
A)  Sum of the years digits 
B)  150 percent declining balance 
C)  200 percent declining balance 
D)  Straight line 
E)  All of the choices are allowable methods under MACRS.

Question 5

What is the basis of the intangibles at the end of the second year?

Accepted Answer

1) Cannon's amortiza

Question 6

Which of the following business assets is not depreciated?

Accepted Answer

A)  Machinery 
B)  Building 
C)  Patent 
D)  Automobile 
E)  All of the assets are depreciated. 
A)  Machinery 
B)  Building 
C)  Patent 
D)  Automobile 
E)  All of the assets are depreciated.

Question 7

An asset's capitalized cost basis includes only the actual purchase price; whereasexpenses to purchase, prepare the asset for use, and begin using the asset are immediately expensed.

Accepted Answer

A) True 
 B)False

Question 8

The MACRS recovery period for automobiles and computers is:

Accepted Answer

A)  10 years. 
B)  5 years. 
C)  7 years. 
D)  3 years. 
E)  None of the choices are correct. 
A)  10 years. 
B)  5 years. 
C)  7 years. 
D)  3 years. 
E)  None of the choices are correct.

Question 9

An office desk is an example of:

Accepted Answer

A)  Business property. 
B)  Real property. 
C)  Personal property. 
D)  Personal-use property. 
E)  Personal property and business property. 
A)  Business property. 
B)  Real property. 
C)  Personal property. 
D)  Personal-use property. 
E)  Personal property and business property.

Question 10

How is the recovery period of an asset determined?

Accepted Answer

A)  Revenue Procedure 87-56 
B)  Revenue Ruling 87-56 
C)  Estimated useful life 
D)  Treasury regulation 
E)  None of the choices are correct. 
A)  Revenue Procedure 87-56 
B)  Revenue Ruling 87-56 
C)  Estimated useful life 
D)  Treasury regulation 
E)  None of the choices are correct.

Question 11

All taxpayers may use the §179 immediate expensing election on certain property.

Accepted Answer

A) True 
 B)False

Question 12

PC Mine purchased a platinum deposit for $3,500,000. It estimated it would extract 17,000 ounces of platinum from the deposit. PC mined the platinum and sold it reporting gross receipts of$500,000 and $8 million for years 1 and 2, respectively. During years 1 and 2, PC reported net income (loss) from the platinum deposit activity in the amount of ($100,000) and $3,800,000, respectively. In years 1 and 2, PC actually extracted 2,000 and 8,000 ounces of platinum. What is PC's depletion expense for years 1 and 2 if the applicable percentage depletion for platinum is 22 percent? (Round final answer to the nearest whole number)

Accepted Answer

Year 1: $411,765
Year 2: $1,760,000
PC h

Question 13

Tax cost recovery methods include depreciation, amortization, and depletion.

Accepted Answer

A) True 
 B)False

Question 14

The MACRS depreciation tables automatically switch to the straight-line method when the straight-line method yields a higher annual depreciation amount than the declining balance method.

Accepted Answer

A) True 
 B)False

The alternative depreciation system requires both a slower method of recovery and longer recovery periods.

During August of the prior year, Julio purchased an apartment building that he used as a rental property. The basis was $1,400,000. Calculate the maximum depreciation expense during the current year. (Use MACRS Table 3 in the text)

Which is not an allowable method under MACRS?

What is the basis of the intangibles at the end of the second year?

Which of the following business assets is not depreciated?

An asset's capitalized cost basis includes only the actual purchase price; whereasexpenses to purchase, prepare the asset for use, and begin using the asset are immediately expensed.

The MACRS recovery period for automobiles and computers is:

An office desk is an example of:

How is the recovery period of an asset determined?

All taxpayers may use the §179 immediate expensing election on certain property.

Tax cost recovery methods include depreciation, amortization, and depletion.

The MACRS depreciation tables automatically switch to the straight-line method when the straight-line method yields a higher annual depreciation amount than the declining balance method.

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The US Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters

Exam 10: Property Acquisition and Cost Recovery

The alternative depreciation system requires both a slower method of recovery and longer recovery periods.

During August of the prior year, Julio purchased an apartment building that he used as a rental property. The basis was $1,400,000. Calculate the maximum depreciation expense during the current year. (Use MACRS Table 3 in the text)

Which is not an allowable method under MACRS?

What is the basis of the intangibles at the end of the second year?

Which of the following business assets is not depreciated?

An asset's capitalized cost basis includes only the actual purchase price; whereasexpenses to purchase, prepare the asset for use, and begin using the asset are immediately expensed.

The MACRS recovery period for automobiles and computers is:

An office desk is an example of:

How is the recovery period of an asset determined?

All taxpayers may use the §179 immediate expensing election on certain property.

Tax cost recovery methods include depreciation, amortization, and depletion.

The MACRS depreciation tables automatically switch to the straight-line method when the straight-line method yields a higher annual depreciation amount than the declining balance method.

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The US Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters