Exam 2: Property Acquisition and Cost Recovery

Amit purchased two assets during the current year.Amit placed in service computer equipment (5-year property)on April 16^th with a basis of $5,000 and furniture (7-year property)on September 9^th with a basis of $20,000.Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation).(Use MACRS Table 1)

(Short Answer)

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Question 21

Geithner LLC patented a process it developed in the current year.The patent is expected to create benefits for Geithner over a 10-year period.The patent was issued on April 15^th and the legal costs associated with the patent were $43,000.In addition,Geithner had unamortized research expenditures of $15,000 related to the process.What is the total amortization expense Geithner may deduct during the current year?

(Multiple Choice)

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Question 22

Reid acquired two assets in 2017: computer equipment (5-year property)acquired on August 6^th with a basis of $510,000 and machinery (7-year property)on November 9th with a basis of $510,000.Assume that Reid has sufficient income to avoid any limitations.Calculate the maximum depreciation expense including §179 expensing (but not bonus expensing).(Use MACRS Table 1)

(Short Answer)

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Question 23

Clay LLC placed in service machinery and equipment (7-year property)with a basis of $2,450,000 on June 6,2016.Assume that Clay has sufficient income to avoid any limitations.Calculate the maximum depreciation expense including §179 expensing (ignoring any possible bonus expensing)(Use MACRS Table 1)(Round final answer to the nearest whole number)

(Multiple Choice)

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Question 24

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

(True/False)

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Question 25

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)

(Short Answer)

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Question 26

Deirdre's business purchased two assets during the current year (a full 12-month tax year).Deirdre placed in service computer equipment (5-year property)on January 20 with a basis of $15,000 and machinery (7-year property)on October 1 with a basis of $15,000.Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation).(Use MACRS Table 2)(Round final answer to the nearest whole number)

(Multiple Choice)

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Question 27

Which depreciation convention is the general rule for tangible personal property?

(Multiple Choice)

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Question 28

Racine started a new business in the current year.She incurred $52,000 of start-up costs.If her business started on November 23^rd of the current year,what is the total expense she may deduct with respect to the start-up costs for her initial year,rounded to the nearest whole number?

(Multiple Choice)

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Question 29

Taxpayers use the half-year convention for all assets.

(True/False)

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Question 30

If a business mistakenly claims too little depreciation,the business must only reduce the asset's basis by the depreciation actually taken rather than the amount of the allowable depreciation.

(True/False)

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Question 31

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

(True/False)

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Question 32

Timothy purchased a new computer for his consulting practice on October 15^th of the current year.The basis of the computer was $4,000.During the Thanksgiving holiday,he decided the computer didn't meet his business needs and gave it to his college-aged son in another state.The computer was never used for business purposes again.Timothy had $50,000 of taxable income before depreciation.What is Timothy's total cost recovery expense with respect to the computer during the current year?

(Short Answer)

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Question 33

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

(True/False)

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Question 34

If the business use percentage for listed property falls below 50 percent,the only adjustment is all future depreciation must be calculated under the straight-line method.

(True/False)

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Question 35

The §179 immediate expensing election phases out based upon the amount of tangible personal property a taxpayer places in service during the year.

(True/False)

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Question 36

Which is not an allowable method under MACRS?

(Multiple Choice)

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Question 37

Which of the allowable methods allows the most accelerated depreciation?

(Multiple Choice)

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Question 38

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?

(Multiple Choice)

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Question 39

Patin Corporation began business on September 23^rd of the current year.It incurred $40,000 of start-up costs and $60,000 of organizational expenditures.How much total amortization may be deducted in the first year? (Round final answer to the nearest whole number)

(Short Answer)

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Question 40

Showing 21 - 40 of 107

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

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)

Which depreciation convention is the general rule for tangible personal property?

Racine started a new business in the current year.She incurred $52,000 of start-up costs.If her business started on November 23^rd of the current year,what is the total expense she may deduct with respect to the start-up costs for her initial year,rounded to the nearest whole number?

Taxpayers use the half-year convention for all assets.

If a business mistakenly claims too little depreciation,the business must only reduce the asset's basis by the depreciation actually taken rather than the amount of the allowable depreciation.

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

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

If the business use percentage for listed property falls below 50 percent,the only adjustment is all future depreciation must be calculated under the straight-line method.

The §179 immediate expensing election phases out based upon the amount of tangible personal property a taxpayer places in service during the year.

Which is not an allowable method under MACRS?

Which of the allowable methods allows the most accelerated depreciation?

Patin Corporation began business on September 23^rd of the current year.It incurred $40,000 of start-up costs and $60,000 of organizational expenditures.How much total amortization may be deducted in the first year? (Round final answer to the nearest whole number)

Business Income,Deductions,and Accounting Methods

Property Dispositions

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Neorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Ustaxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters

Exam 2: Property Acquisition and Cost Recovery

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

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)

Which depreciation convention is the general rule for tangible personal property?

Racine started a new business in the current year.She incurred $52,000 of start-up costs.If her business started on November 23rd of the current year,what is the total expense she may deduct with respect to the start-up costs for her initial year,rounded to the nearest whole number?

Taxpayers use the half-year convention for all assets.

If a business mistakenly claims too little depreciation,the business must only reduce the asset's basis by the depreciation actually taken rather than the amount of the allowable depreciation.

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

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

If the business use percentage for listed property falls below 50 percent,the only adjustment is all future depreciation must be calculated under the straight-line method.

The §179 immediate expensing election phases out based upon the amount of tangible personal property a taxpayer places in service during the year.

Which is not an allowable method under MACRS?

Which of the allowable methods allows the most accelerated depreciation?

Patin Corporation began business on September 23rd of the current year.It incurred $40,000 of start-up costs and $60,000 of organizational expenditures.How much total amortization may be deducted in the first year? (Round final answer to the nearest whole number)

Business Income,Deductions,and Accounting Methods

Property Dispositions

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Neorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Ustaxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters

Racine started a new business in the current year.She incurred $52,000 of start-up costs.If her business started on November 23^rd of the current year,what is the total expense she may deduct with respect to the start-up costs for her initial year,rounded to the nearest whole number?

Patin Corporation began business on September 23^rd of the current year.It incurred $40,000 of start-up costs and $60,000 of organizational expenditures.How much total amortization may be deducted in the first year? (Round final answer to the nearest whole number)