Exam 10: Depreciation, cost Recovery, amortization, and Depletion

In the current year George,a college professor,acquired a computer system (5-year property) for $1,000 and used the computer 80% for teaching and research-related activities and the remaining 20% for personal use.Because George's employer provides him with a computer in his office at the university,the employer does not require him to have a computer at home.No election was made regarding Sec.179.The maximum depreciation deduction is

Maria,a sole proprietor,has several items of office furniture and equipment which are depreciable.All were acquired before this year.She is not required to report her depreciation deduction on Form 4562.

Mehmet,a calendar-year taxpayer,acquires 5-year tangible personal property in 2017 and does not use Sec.179.The property does not qualify for bonus depreciation.Mehmet places the property in service on the following schedule: What is the total depreciation for 2016?

Joan bought a business machine for $15,000.In a later year,she sold the machine for $12,800 when the total allowable depreciation is $8,500.The depreciation actually taken on the tax returns totaled $8,000.Joan must recognize a gain (or loss) of

Under the MACRS system,the same convention that applies in the year of acquisition (e.g.,half-year,mid-quarter,or mid-month) also applies in the year of disposition.

Harrison acquires $65,000 of 5-year property in June 2015 that is required to be depreciated using the mid-quarter convention (because of other purchases that year).He did not elect Sec.179 immediate expensing.Bonus depreciation was not available.If Harrison sells the property on August 23,2017,what is the amount of depreciation claimed in 2017?

In July of 2017,Pat acquired a new automobile for $28,000 and used the automobile 80% for business.Pat can take a maximum depreciation deduction in 2017 of

If a company acquires goodwill in connection with the acquisition of a business,the goodwill is amortizable over a 60-month period.

Land,buildings,equipment,and common stock are examples of tangible property.

The MACRS system requires that residential rental property and nonresidential real property be depreciated using the straight-line method.

The mid-quarter convention applies to personal and real property.

Tronco Inc.placed in service a truck costing $40,000 on January 15 of this year.On November 1,the company placed in service $200,000 of construction equipment.Tronco is a calendar-year taxpayer.When calculating MACRS depreciation,Tronco must apply the mid-quarter convention to the construction equipment,but will use the half-year convention for the truck.

Chahana acquired and placed in service $665,000 of equipment on August 1,2017 for use in her sole proprietorship.The equipment is 5-year recovery property.No other acquisitions are made during the year.Chahana elects to expense the maximum amount under Sec.179.Assuming the property does not qualify for bonus depreciation,Chahana's total deductions for the year (including Sec.179 and depreciation) are

Personal property used in a rental activity held for investment qualifies for the Section 179 expensing election.

When a taxpayer leases an automobile for 100% business purposes,the entire lease payment is deductible.

Fariq purchases and places in service in 2017 personal property costing $2,051,000.The property does not qualify for bonus depreciation.What is the maximum Sec.179 deduction that Fariq can deduct,ignoring any taxable income limitation?

In November 2017,Kendall purchases a computer for $4,000.She does not use Sec.179 expensing,and the property does not qualify for bonus depreciation.She only uses the most accelerated depreciation method possible.The computer is the only personal property which she places in service during the year.What is her total depreciation deduction for this year?

Which of the following statements regarding Sec.179 is true?

Amounts paid in connection with the acquisition of a business which represent a covenant not to compete are amortizable over the covenant's remaining life.

Jimmy acquires an oil and gas property interest for $600,000.Jimmy expects to recover 200,000 barrels of oil.Intangible drilling and development costs are $160,000 and are charged to expense.Other expenses are $40,000.During the year,25,000 barrels of oil are sold for $800,000.Jimmy's depletion deduction is