Exam 9: Property Acquisition and Cost Recovery

Taxpayers use the half-year convention for all assets.

The mid-month convention applies to real property in the year of acquisition and disposition.

Which of the following business assets is not depreciated?

In general,major integrated oil and gas producers may take the greater of cost or percentage depletion.

Oksana started an LLC on November 2 of the current year.She incurred $30,000 of start-up costs.How much of the start-up costs can be immediately expensed for the year? How much amortization may Oksana deduct in the first year?

Taylor LLC purchased an automobile for $55,000 on July 5,2018.What is Taylor's maximum depreciation expense for 2018 if its business use percentage is 100 percent?

Tax depreciation is currently calculated under what system?

Depreciation is currently computed under the Modified Accelerated Cost Recovery System (MACRS).

Daschle LLC completed some research and development during June of the current year.The related costs were $60,000.If Daschle wants to capitalize and amortize the costs as quickly as possible,what is the total amortization expense Daschle may deduct during the current year?

An office desk is an example of:

Used property is eligible for bonus 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.)

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.

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.

All assets subject to amortization have the same recovery period.

Assume that Brittany acquires a competitor's assets on September 30ᵗʰ of year 1 for $350,000.Of that amount,$300,000 is allocated to tangible assets and $50,000 is allocated equally to two §197 intangible assets (goodwill and a 1-year non-compete agreement).Given,that the non-compete agreement expires on September 30ᵗʰ of year 2,what is Brittany's amortization expense for the second year? (Round final answer to the nearest whole number.)

-Lax,LLC purchased only one asset during the current year (a full 12-month tax year).Lax placed in service computer equipment (5-year property)on August 26 with a basis of $20,000.Calculate the maximum depreciation expense for the current year (ignoring §179 and bonus depreciation).(Use MACRS Table 1)

Businesses deduct percentage depletion when they sell the natural resource and they deduct cost depletion in the year they produce or extract the natural resource.

Taxpayers may always expense a portion of start-up costs and organizational expenditures.

IN THE TEXT -Poplock LLC purchased a warehouse and land during the current year for $350,000.The purchase price was allocated as follows: $275,000 to the building and $75,000 to the land.The property was placed in service on August 12.Calculate Poplock's maximum depreciation for this first year.(Use MACRS Table 5)(Round final answer to the nearest whole number.)