Question 1

For personal property placed in service in 2012, the § 179 maximum deduction is limited to $139,000.

Accepted Answer

A) True 
 B)False

Question 2

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 3

White Company acquires a new machine (seven-year property) on January 10, 2012, at a cost of $600,000.White makes the election to expense the maximum amount under § 179.No election is made to use the straight-line method. White does take additional first-year depreciation.Determine the total deductions in calculating taxable income related to the machine for 2012 assuming White has taxable income of $800,000.

Accepted Answer

A) $71,593. 
B) $128,610. 
C) $204,877. 
D) $385,296. 
E) None of the above. 
A) $71,593. 
B) $128,610. 
C) $204,877. 
D) $385,296. 
E) None of the above.

Question 4

On May 2, 2012, Karen placed in service a new sports utility vehicle that cost $60,000 and has a gross vehicle weight of 6,300 lbs. The vehicle is used 60% for business and 40% for personal use. Determine the cost recovery for 2012.Karen wants to maximize her deductions.

Accepted Answer

A) $2,200. 
B) $3,060. 
C) $25,000. 
D) $27,200. 
E) None of the above. 
A) $2,200. 
B) $3,060. 
C) $25,000. 
D) $27,200. 
E) None of the above.

Question 5

The cost recovery period for new farm equipment placed in service during 2012 is seven years.

Accepted Answer

A) True 
 B)False

Question 6

Percentage depletion enables the taxpayer to recover more than the cost of an asset.

Accepted Answer

A) True 
 B)False

Question 7

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 8

The basis of cost recovery property must be reduced by the cost recovery allowed.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following assets would be subject to cost recovery?

Accepted Answer

A) A painting by Picasso hanging on a doctor's office wall. 
B) An antique vase in a doctor's waiting room. 
C) Stock in the doctor's LLC. 
D) a., b., and c. 
E) None of the above. 
A) A painting by Picasso hanging on a doctor's office wall. 
B) An antique vase in a doctor's waiting room. 
C) Stock in the doctor's LLC. 
D) a., b., and c. 
E) None of the above.

Question 10

Taxpayers may elect to use the straight-line method under MACRS for personalty.

Accepted Answer

A) True 
 B)False

Question 11

Janet purchased a new car on June 5, 2012, at a cost of $18,000.She used the car 80% for business and 20% for personal use in 2012.She used the automobile 40% for business and 60% for personal use in 2013. Janet takes additional first-year depreciation. Determine Janet's cost recovery recapture for 2013.

Accepted Answer

A) $0. 
B) $928. 
C) $1,008. 
D) $7,408. 
E) None of the above. 
A) $0. 
B) $928. 
C) $1,008. 
D) $7,408. 
E) None of the above.

Question 12

All listed property is subject to the substantiation requirements of § 274.

Accepted Answer

A) True 
 B)False

Question 13

In 2011, Gail had a § 179 deduction carryover of $25,000.In 2012, she elected § 179 for an asset acquired at a cost of $115,000.Gail's § 179 business income limitation for 2012 is $142,000.Determine Gail's § 179 deduction for 2012.

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 14

Discuss the effect on the cost recovery method of a taxpayer election if the uniform capitalization rules apply to a farming business.

Accepted Answer

The cost recovery me

Question 15

Bonnie purchased a new business asset (five-year property) on March 10, 2012, at a cost of $30,000.She also purchased a new business asset (seven-year property) on November 20, 2012, at a cost of $13,000.Bonnie did not elect to expense either of the assets under § 179, nor did she elect straight-line cost recovery. Bonnies takes additional first-year depreciation. Determine the cost recovery deduction for 2012 for these assets.

Accepted Answer

A) $5,858. 
B) $7,464. 
C) $9,586. 
D) $19,429. 
E) None of the above. 
A) $5,858. 
B) $7,464. 
C) $9,586. 
D) $19,429. 
E) None of the above.

Question 16

Nora purchased a new automobile on July 20, 2012, for $29,000.The car was used 60% for business and 40% for personal use.In 2013, the car was used 30% for business and 70% for personal use. Nora elects not to take additional first-year depreciation. Determine the cost recovery recapture and the cost recovery deduction for 2013.

Accepted Answer

Cost recovery in 201

For personal property placed in service in 2012, the § 179 maximum deduction is limited to $139,000.

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.

On May 2, 2012, Karen placed in service a new sports utility vehicle that cost $60,000 and has a gross vehicle weight of 6,300 lbs. The vehicle is used 60% for business and 40% for personal use. Determine the cost recovery for 2012.Karen wants to maximize her deductions.

The cost recovery period for new farm equipment placed in service during 2012 is seven years.

Percentage depletion enables the taxpayer to recover more than the cost of an asset.

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

The basis of cost recovery property must be reduced by the cost recovery allowed.

Which of the following assets would be subject to cost recovery?

Taxpayers may elect to use the straight-line method under MACRS for personalty.

All listed property is subject to the substantiation requirements of § 274.

In 2011, Gail had a § 179 deduction carryover of $25,000.In 2012, she elected § 179 for an asset acquired at a cost of $115,000.Gail's § 179 business income limitation for 2012 is $142,000.Determine Gail's § 179 deduction for 2012.

Discuss the effect on the cost recovery method of a taxpayer election if the uniform capitalization rules apply to a farming business.

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

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

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

A: Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 1

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Property Transactions: Capital Gains and Losses, 1231, Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S: Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Income Taxation of Trusts and Estates

Filters

Exam 8: Depreciation, Cost Recovery, Amortization, and Depletion

For personal property placed in service in 2012, the § 179 maximum deduction is limited to $139,000.

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.

On May 2, 2012, Karen placed in service a new sports utility vehicle that cost $60,000 and has a gross vehicle weight of 6,300 lbs. The vehicle is used 60% for business and 40% for personal use. Determine the cost recovery for 2012.Karen wants to maximize her deductions.

The cost recovery period for new farm equipment placed in service during 2012 is seven years.

Percentage depletion enables the taxpayer to recover more than the cost of an asset.

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

The basis of cost recovery property must be reduced by the cost recovery allowed.

Which of the following assets would be subject to cost recovery?

Taxpayers may elect to use the straight-line method under MACRS for personalty.

All listed property is subject to the substantiation requirements of § 274.

In 2011, Gail had a § 179 deduction carryover of $25,000.In 2012, she elected § 179 for an asset acquired at a cost of $115,000.Gail's § 179 business income limitation for 2012 is $142,000.Determine Gail's § 179 deduction for 2012.

Discuss the effect on the cost recovery method of a taxpayer election if the uniform capitalization rules apply to a farming business.

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

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

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

A: Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 1

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Property Transactions: Capital Gains and Losses, 1231, Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S: Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Income Taxation of Trusts and Estates

Filters