Question 1

How is the recovery period of an asset determined?

Accepted Answer

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

Question 2

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

Accepted Answer

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

Question 3

Which of the following assets is eligible for bonus depreciation?

Accepted Answer

A)  Used office machinery 
B)  Qualified leasehold improvements 
C)  A new delivery truck 
D)  Used office furniture 
E)  All of the choices are correct. 
A)  Used office machinery 
B)  Qualified leasehold improvements 
C)  A new delivery truck 
D)  Used office furniture 
E)  All of the choices are correct.

Question 4

Alexandra purchased a $35,000 automobile during 2017.The business use was 70 percent.What is the allowable depreciation for the current year (ignore any possible bonus depreciation)?  Exhibit 10-8 in the text

Accepted Answer

$2,212
The maximum depreciatio

Question 5

Beth's business purchased only one asset during the current year (a full 12-month tax year).Beth placed in service machinery (7-year property)on December 1 with a basis of $50,000.Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation).(Use MACRS Table 2 in the text)

Accepted Answer

A)  $1,785. 
B)  $2,500. 
C)  $7,145. 
D)  $10,000. 
E)  None of the choices are correct. 
A)  $1,785. 
B)  $2,500. 
C)  $7,145. 
D)  $10,000. 
E)  None of the choices are correct.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

If a machine (seven-year property)being depreciated using the half-year convention is disposed of during the seventh year,a taxpayer must multiply the appropriate depreciation percentage from the MACRS table percentage by 50 percent to calculate the depreciation expense properly.

Accepted Answer

A) True 
 B)False

Question 8

Jasmine started a new business in the current year.She incurred $10,000 of start-up costs.How much of the start-up costs can be immediately expensed (excluding amounts amortized over 180 months)for the year?

Accepted Answer

A)  $0 
B)  $2,500 
C)  $5,000 
D)  $10,000 
E)  None of the choices are correct. 
A)  $0 
B)  $2,500 
C)  $5,000 
D)  $10,000 
E)  None of the choices are correct.

Question 9

The §179 immediate expensing election phases out based upon a taxpayer's taxable income.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Taxpayers use the half-year convention for all assets.

Accepted Answer

A) True 
 B)False

Question 12

Like financial accounting,most acquired business property must be capitalized for tax purposes.

Accepted Answer

A) True 
 B)False

Question 13

Eddie purchased only one asset during the current year.Eddie placed in service furniture (7-year property)on May 1ˢᵗ with a basis of $26,500.Calculate the maximum depreciation expense,rounded to the nearest whole number (ignoring §179 and bonus depreciation).(Use MACRS Table 1 in the text)

Accepted Answer

$3,787
The asset's recovery period is 7

Question 14

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 15

Which of the allowable methods allows the most accelerated depreciation?

Accepted Answer

A)  150 percent declining balance 
B)  200 percent declining balance 
C)  Straight line 
D)  Sum of the years digits 
E)  None of the methods would allow accelerated depreciation. 
A)  150 percent declining balance 
B)  200 percent declining balance 
C)  Straight line 
D)  Sum of the years digits 
E)  None of the methods would allow accelerated depreciation.

Question 16

Tax cost recovery methods do not include:

Accepted Answer

A)  Amortization. 
B)  Capitalization. 
C)  Depletion. 
D)  Depreciation. 
E)  All of the choices are tax cost recovery methods. 
A)  Amortization. 
B)  Capitalization. 
C)  Depletion. 
D)  Depreciation. 
E)  All of the choices are tax cost recovery methods.

Question 17

The manner in which a business amortizes a patent or copyright is the same whether the business directly purchases the patent or copyright or whether it self-creates the intangible.

Accepted Answer

A) True 
 B)False

Question 18

Cost depletion is available to all natural resource producers.

Accepted Answer

A) True 
 B)False

Question 19

Santa Fe purchased the rights to extract turquoise on a tract of land over a five-year period.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 depletion expense for the current year?

Accepted Answer

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

Question 20

Sairra,LLC purchased only one asset during the current year (a full 12-month tax year).Sairra placed in service furniture (7-year property)on April 16 with a basis of $25,000.Calculate the maximum depreciation expense for the current year? (ignoring §179 and bonus depreciation).(Use MACRS Table 1 in the text)(Round final answer to the nearest whole number)

Accepted Answer

A)  $1,786. 
B)  $3,573. 
C)  $4,463. 
D)  $5,000. 
E)  None of the choices are correct. 
A)  $1,786. 
B)  $3,573. 
C)  $4,463. 
D)  $5,000. 
E)  None of the choices are correct.

How is the recovery period of an asset determined?

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

Which of the following assets is eligible for bonus depreciation?

Alexandra purchased a $35,000 automobile during 2017.The business use was 70 percent.What is the allowable depreciation for the current year (ignore any possible bonus depreciation)? Exhibit 10-8 in the text

Beth's business purchased only one asset during the current year (a full 12-month tax year).Beth placed in service machinery (7-year property)on December 1 with a basis of $50,000.Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation).(Use MACRS Table 2 in the text)

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

If a machine (seven-year property)being depreciated using the half-year convention is disposed of during the seventh year,a taxpayer must multiply the appropriate depreciation percentage from the MACRS table percentage by 50 percent to calculate the depreciation expense properly.

Jasmine started a new business in the current year.She incurred $10,000 of start-up costs.How much of the start-up costs can be immediately expensed (excluding amounts amortized over 180 months)for the year?

The §179 immediate expensing election phases out based upon a taxpayer's taxable income.

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

Taxpayers use the half-year convention for all assets.

Like financial accounting,most acquired business property must be capitalized for tax purposes.

Eddie purchased only one asset during the current year.Eddie placed in service furniture (7-year property)on May 1ˢᵗ with a basis of $26,500.Calculate the maximum depreciation expense,rounded to the nearest whole number (ignoring §179 and bonus depreciation).(Use MACRS Table 1 in the text)

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 of the allowable methods allows the most accelerated depreciation?

Tax cost recovery methods do not include:

The manner in which a business amortizes a patent or copyright is the same whether the business directly purchases the patent or copyright or whether it self-creates the intangible.

Cost depletion is available to all natural resource producers.

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

Filters

Exam 10: Property Acquisition and Cost Recovery

How is the recovery period of an asset determined?

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

Which of the following assets is eligible for bonus depreciation?

Alexandra purchased a $35,000 automobile during 2017.The business use was 70 percent.What is the allowable depreciation for the current year (ignore any possible bonus depreciation)? Exhibit 10-8 in the text

Beth's business purchased only one asset during the current year (a full 12-month tax year).Beth placed in service machinery (7-year property)on December 1 with a basis of $50,000.Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation).(Use MACRS Table 2 in the text)

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

If a machine (seven-year property)being depreciated using the half-year convention is disposed of during the seventh year,a taxpayer must multiply the appropriate depreciation percentage from the MACRS table percentage by 50 percent to calculate the depreciation expense properly.

Jasmine started a new business in the current year.She incurred $10,000 of start-up costs.How much of the start-up costs can be immediately expensed (excluding amounts amortized over 180 months)for the year?

The §179 immediate expensing election phases out based upon a taxpayer's taxable income.

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

Taxpayers use the half-year convention for all assets.

Like financial accounting,most acquired business property must be capitalized for tax purposes.

Eddie purchased only one asset during the current year.Eddie placed in service furniture (7-year property)on May 1ˢᵗ with a basis of $26,500.Calculate the maximum depreciation expense,rounded to the nearest whole number (ignoring §179 and bonus depreciation).(Use MACRS Table 1 in the text)

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 of the allowable methods allows the most accelerated depreciation?

Tax cost recovery methods do not include:

The manner in which a business amortizes a patent or copyright is the same whether the business directly purchases the patent or copyright or whether it self-creates the intangible.

Cost depletion is available to all natural resource producers.

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

Filters