Question 1

A purchased trademark is a § 197 intangible.

Accepted Answer

A) True 
 B)False

Question 2

Mary purchased a new five-year class asset on March 7,2016.The asset was listed property (not an automobile).It was used 60% for business and the rest of the time for personal use.The asset cost $900,000.Mary made the § 179 election.The income from the business before the § 179 deduction was $600,000.Mary also takes additional first-year depreciation (if available).Determine the total deductions with respect to the asset for 2016.

Accepted Answer

A) $72,000 
B) $271,600 
C) $524,000 
D) $600,000 
E) None of the above 
A) $72,000 
B) $271,600 
C) $524,000 
D) $600,000 
E) None of the above

Question 3

In 2015,Gail had a § 179 deduction carryover of $30,000.In 2016,she elected § 179 for an asset acquired at a cost of $115,000.Gail's § 179 business income limitation for 2016 is $140,000.Determine Gail's § 179 deduction for 2016.

Accepted Answer

A) $25,000 
B) $115,000 
C) $130,000 
D) $140,000 
E) None of the above 
A) $25,000 
B) $115,000 
C) $130,000 
D) $140,000 
E) None of the above

Question 4

The § 179 deduction can exceed $500,000 in 2016 if the taxpayer had a § 179 amount which exceeded the taxable income limitation in the prior year.

Accepted Answer

A) True 
 B)False

Question 5

Discuss the beneficial tax consequences of an SUV not being classified as a passenger automobile.

Accepted Answer

If an automobile is not classified as a

Question 6

Discuss the reason for the inclusion amount with respect to leased automobiles.

Accepted Answer

The purpose of the inclusion a

Question 7

The cost recovery basis for property converted from personal use to business use may be the fair market value of the property at the time of the conversion.

Accepted Answer

A) True 
 B)False

Question 8

Discuss the requirements in order for startup expenditures to be amortized under § 195.

Accepted Answer

The expenditures must meet two requireme

Question 9

Discuss the tax consequences of listed property being used for the production of income compared to being used in a trade or business.

Accepted Answer

Section 179 expensing cannot b

Question 10

On June 1,2016,James places in service a new automobile that cost $40,000.The car is used 60% for business and 40% for personal use.(Assume this percentage is maintained for the life of the car. )James does not take additional first-year depreciation (if available).Determine the cost recovery deduction for 2016.

Accepted Answer

A) $1,776 
B) $1,896 
C) $4,800 
D) $8,000 
E) None of the above 
A) $1,776 
B) $1,896 
C) $4,800 
D) $8,000 
E) None of the above

Question 11

Polly purchased a new hotel on July 20,2016,for $6,000,000.On January 20,2023,the building was sold.Determine the cost recovery deduction for the year of the sale.

Accepted Answer

$6,000,000

Question 12

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 13

Tan Company acquires a new machine (ten-year property)on January 15,2016,at a cost of $200,000.Tan also acquires another new machine (seven-year property)on November 5,2016,at a cost of $40,000.No election is made to use the straight-line method.The company does not make the § 179 election and elects to not take additional first-year depreciation if available.Determine the total deductions in calculating taxable income related to the machines for 2016.

Accepted Answer

A) $24,000 
B) $25,716 
C) $102,000 
D) $132,858 
E) None of the above 
A) $24,000 
B) $25,716 
C) $102,000 
D) $132,858 
E) None of the above

Question 14

Taxable income for purposes of § 179 limited expensing is computed by including the MACRS deduction.

Accepted Answer

A) True 
 B)False

Question 15

Intangible drilling costs must be capitalized and recovered through depletion.

Accepted Answer

A) True 
 B)False

Question 16

On March 1,2016,Lana leases and places in service a passenger automobile.The lease will run for five years and the payments are $500 per month.During 2016,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 17

For real property,the ADS convention is the mid-month convention.

Accepted Answer

A) True 
 B)False

Question 18

Land improvements are generally not eligible for cost recovery.

Accepted Answer

A) True 
 B)False

Question 19

During the past two years,through extensive advertising and improved customer relations,Orange Corporation estimated that it had developed customer goodwill worth $500,000.For the current year,determine the amount of goodwill Orange Corporation may amortize.

Accepted Answer

A) $16,667 
B) $26,667 
C) $33,333 
D) $100,000 
E) None of the above 
A) $16,667 
B) $26,667 
C) $33,333 
D) $100,000 
E) None of the above

Question 20

Percentage depletion enables the taxpayer to recover more than the cost of an asset in the form of tax deductions.

Accepted Answer

A) True 
 B)False

A purchased trademark is a § 197 intangible.

In 2015,Gail had a § 179 deduction carryover of $30,000.In 2016,she elected § 179 for an asset acquired at a cost of $115,000.Gail's § 179 business income limitation for 2016 is $140,000.Determine Gail's § 179 deduction for 2016.

The § 179 deduction can exceed $500,000 in 2016 if the taxpayer had a § 179 amount which exceeded the taxable income limitation in the prior year.

Discuss the beneficial tax consequences of an SUV not being classified as a passenger automobile.

Discuss the reason for the inclusion amount with respect to leased automobiles.

The cost recovery basis for property converted from personal use to business use may be the fair market value of the property at the time of the conversion.

Discuss the requirements in order for startup expenditures to be amortized under § 195.

Discuss the tax consequences of listed property being used for the production of income compared to being used in a trade or business.

Polly purchased a new hotel on July 20,2016,for $6,000,000.On January 20,2023,the building was sold.Determine the cost recovery deduction for the year of the sale.

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.

Taxable income for purposes of § 179 limited expensing is computed by including the MACRS deduction.

Intangible drilling costs must be capitalized and recovered through depletion.

For real property,the ADS convention is the mid-month convention.

Land improvements are generally not eligible for cost recovery.

During the past two years,through extensive advertising and improved customer relations,Orange Corporation estimated that it had developed customer goodwill worth $500,000.For the current year,determine the amount of goodwill Orange Corporation may amortize.

Percentage depletion enables the taxpayer to recover more than the cost of an asset in the form of tax deductions.

An Introduction to Taxation and Understanding the Federal 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

Deduction and Losses Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions Determination of Gain and Loss and Basic Considerations

Property Transactions Nontaxable Exchanges

Property Transactions Capital Gains and Losses

Property Transactions Section 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

Exam 8: Depreciation Cost Recovery Amortization and Depletion

A purchased trademark is a § 197 intangible.

In 2015,Gail had a § 179 deduction carryover of $30,000.In 2016,she elected § 179 for an asset acquired at a cost of $115,000.Gail's § 179 business income limitation for 2016 is $140,000.Determine Gail's § 179 deduction for 2016.

The § 179 deduction can exceed $500,000 in 2016 if the taxpayer had a § 179 amount which exceeded the taxable income limitation in the prior year.

Discuss the beneficial tax consequences of an SUV not being classified as a passenger automobile.

Discuss the reason for the inclusion amount with respect to leased automobiles.

The cost recovery basis for property converted from personal use to business use may be the fair market value of the property at the time of the conversion.

Discuss the requirements in order for startup expenditures to be amortized under § 195.

Discuss the tax consequences of listed property being used for the production of income compared to being used in a trade or business.

Polly purchased a new hotel on July 20,2016,for $6,000,000.On January 20,2023,the building was sold.Determine the cost recovery deduction for the year of the sale.

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.

Taxable income for purposes of § 179 limited expensing is computed by including the MACRS deduction.

Intangible drilling costs must be capitalized and recovered through depletion.

For real property,the ADS convention is the mid-month convention.

Land improvements are generally not eligible for cost recovery.

During the past two years,through extensive advertising and improved customer relations,Orange Corporation estimated that it had developed customer goodwill worth $500,000.For the current year,determine the amount of goodwill Orange Corporation may amortize.

Percentage depletion enables the taxpayer to recover more than the cost of an asset in the form of tax deductions.

An Introduction to Taxation and Understanding the Federal 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

Deduction and Losses Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions Determination of Gain and Loss and Basic Considerations

Property Transactions Nontaxable Exchanges

Property Transactions Capital Gains and Losses

Property Transactions Section 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters