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

Ilene owns an unincorporated manufacturing business.In 2017,she purchases and places in service $2,036,000 of qualifying five-year equipment for use in her business.The property does not qualify for bonus depreciation.Her taxable income from the business before any Sec.179 deduction is $400,000.Ilene takes the maximum allowable deduction under section 179.Which of the following statements is true regarding the Sec.179 election?

If a new luxury automobile is used 100% for business and placed in service in 2016,the maximum MACRS depreciation on the vehicle for 2017 is $11,160.

Once the business use of listed property falls to 50% or below,the alternative depreciation system must be used for the current year and all subsequent years,even if the business use percentage increases to more than 50% in a subsequent year.

In computing MACRS depreciation in the year of disposition of personal property used in a trade or business,the half-year convention must be applied to the amounts in the tables if the half-year convention was used in the year the asset was placed into service.

If the business usage of listed property is less than or equal to 50% of its total usage,depreciation is calculated using the

On May 1,2008,Empire Properties Corp.,a calendar-year taxpayer,purchased an apartment building for $1,000,000,of which $400,000 was allocable to the land.The corporation sold the property this year on September 23,2017. a.What was the corporation's depreciation for the building,using statutory percentages under MACRS for 2008? b.What was the corporation's depreciation for the building,using statutory percentages under MACRS for 2017?

Paul bought a computer for $15,000 for business use on March 18,2015.This was his only purchase for that year.Paul used the most accelerated depreciation method available,but did not elect Sec.179.Bonus depreciation was not available.Paul sells the machine in 2017.The depreciation on the computer for 2017 is

On April 12,2016,Suzanne bought a computer for $20,000 for business use.This was the only purchase for that year.Suzanne used the most accelerated depreciation method available but did not elect Sec.179.Bonus depreciation was not available.Suzanne sells the machine in 2017.The depreciation on the computer for 2017 is

MACRS recovery property includes tangible personal and real property that is used in a trade or business.

Trenton Corporation places in service $10 million of equipment on June 1,2017.The equipment is five-year property,and it is not "used" property.What is the maximum cost recovery deduction Trenton Corporation is allowed this year with respect to this property?

Costs that qualify as research and experimental expenditures include all of the following except

The straight-line method may be elected for depreciating tangible personal property placed in service after 1986.

Enrico is a self-employed electrician.In May of the current year,Enrico acquired a used van (5-year property) for $12,000.He used the van 80% for business and 20% for personal purposes.Enrico does not take any Sec.179 deduction.The maximum depreciation deduction for the van is

A large SUV is placed in service in 2017.MACRS depreciation on an SUV weighing over 6,000 pounds is limited to $11,160 for the first year placed in service.

When depreciating 5-year property,the final year of depreciation will be year

The election to use ADS is made on a year-by-year,property-class by property-class basis for real and personal property.

Terra Corporation,a calendar-year taxpayer,purchases and places into service machinery with a 7-year life that costs $650,000.Neither the mid-quarter convention,nor bonus depreciation apply.Terra elects to depreciate the maximum under Sec.179.Terra's taxable income for the year before the Sec.179 deduction is $700,000.What is Terra's total depreciation deduction related to this property (rounded to the nearest dollar)?

Atiqa took out of service and sold a residential rental property on October 31 of this year.She had originally acquired the property in July ten years ago.The building (excluding the value of the land) cost $1,000,000.How much is her current year depreciation deduction?

Most taxpayers elect to expense R&E expenditures because of the immediate tax benefit.

This year Bauer Corporation incurs the following costs in development of new products: No benefits are realized from the research expenditures until next year.If Bauer Corporation elects to expense the research expenditures,the deduction is