Question 1

Goodwill associated with the acquisition of a business cannot be amortized.

Accepted Answer

A) True 
 B)False

Question 2

On February 15, 2012, Martin signed a 20-year lease on a commercial building. In March 2012, Martin purchased and placed in service new seven-year class assets costing $400,000. In June 2012, Martin paid $200,000 for qualified leasehold real property improvements. Martin desires to take the maximum cost recovery deduction with respect to the assets in 2012. He takes additional first-year depreciation. Assuming taxable income is not a limitation, determine Martin's maximum cost recovery for 2012.

Accepted Answer

The answer of On February 15, 2012, Martin signed a...

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

A purchased trademark is a § 197 intangible.

Accepted Answer

A) True 
 B)False

Question 5

On July 10, 2012, Ariff places in service a new sports utility vehicle that cost $70,000 and weighed 6,300 pounds.The SUV is used 100% for business.Determine Ariff's maximum deduction for 2012, assuming Ariff's § 179 business income is $110,000. Ariff does not take additional first-year depreciation.

Accepted Answer

A) $2,960. 
B) $25,000. 
C) $34,000. 
D) $70,000. 
E) None of the above. 
A) $2,960. 
B) $25,000. 
C) $34,000. 
D) $70,000. 
E) None of the above.

Question 6

Augie purchased one new asset during the year (five-year property) on November 10, 2012, at a cost of $450,000. She made the § 179 election.The income from the business before the cost recovery deduction and the § 179 deduction was $310,000.She takes additional first-year depreciation. Determine the total cost recovery deduction with respect to the asset for 2012.

Accepted Answer

A) $22,500. 
B) $154,550. 
C) $302,275. 
D) $310,000. 
E) None of the above. 
A) $22,500. 
B) $154,550. 
C) $302,275. 
D) $310,000. 
E) None of the above.

Question 7

Mary purchased a new five-year class asset on March 7, 2012.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 $600,000.Mary made the § 179 election.The income from the business before the § 179 deduction was $400,000.Mary does take additional first-year depreciation. Determine the total deductions with respect to the asset for 2012.

Accepted Answer

A) $72,000. 
B) $250,000. 
C) $272,000. 
D) $360,000. 
E) None of the above. 
A) $72,000. 
B) $250,000. 
C) $272,000. 
D) $360,000. 
E) None of the above.

Question 8

On April 5, 2012, Orange Corporation purchased, and placed in service, seven-year class assets costing $500,000 and five-year class assets costing $140,000. Orange elects to expense the maximum amount under § 179. Orange does not take additional first-year depreciation. Assume taxable income is not a limitation. Determine Orange Corporation's cost recovery with respect to the assets for 2012.

Accepted Answer

The answer of On April 5, 2012, Orange Corporation purchased,...

Question 9

Rick purchased a uranium interest for $10,000,000 on January 3, 2012, when recoverable reserves were estimated at 200,000 units.A total of 10,000 units were extracted in 2012 and 7,000 units were sold in 2012.Gross income from the property was $2,800,000 and taxable income without the allowance for depletion was $1,000,000.Determine the depletion deduction for 2012.

Accepted Answer

Cost depletion
Percentage depl

Question 10

George purchases used seven-year class property at a cost of $200,000 on April 20, 2012.Determine George's cost recovery deduction for 2012 for alternative minimum tax purposes, assuming George does not elect § 179.

Accepted Answer

A) $2,500. 
B) $10,000. 
C) $14,280. 
D) $28,580. 
E) None of the above. 
A) $2,500. 
B) $10,000. 
C) $14,280. 
D) $28,580. 
E) None of the above.

Question 11

Joe purchased a new five-year class asset on June 1, 2012.The asset is listed property (not an automobile).It was used 55% for business and 45% for the production of income.The asset cost $1,000,000.Joe made the § 179 election.Joe's taxable income would not create a limitation for purposes of the § 179 deduction. Joe does not take additional first-year depreciation.Determine Joe's total cost recovery (including the § 179 deduction) for the year.

Accepted Answer

Business use: $550,000 ($1,000

Question 12

The statutory dollar cost recovery limits under § 280F do not apply to all automobiles.

Accepted Answer

A) True 
 B)False

Question 13

Grape Corporation purchased a machine in December of the current year.This was the only asset purchased during the current year.The machine was placed in service in January of the following year.No assets were purchased in the following year.Grape Corporation's cost recovery would begin:

Accepted Answer

A) In the current year using a mid-quarter convention. 
B) In the current year using a half-year convention. 
C) In the following year using a mid-quarter convention. 
D) In the following year using a half-year convention. 
E) None of the above. 
A) In the current year using a mid-quarter convention. 
B) In the current year using a half-year convention. 
C) In the following year using a mid-quarter convention. 
D) In the following year using a half-year convention. 
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

All eligible real estate under MACRS is permitted one-half month of cost recovery in the month of disposition.

Accepted Answer

A) True 
 B)False

Question 16

Motel buildings are classified as residential rental real estate.

Accepted Answer

A) True 
 B)False

Goodwill associated with the acquisition of a business cannot be amortized.

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

A purchased trademark is a § 197 intangible.

George purchases used seven-year class property at a cost of $200,000 on April 20, 2012.Determine George's cost recovery deduction for 2012 for alternative minimum tax purposes, assuming George does not elect § 179.

The statutory dollar cost recovery limits under § 280F do not apply to all automobiles.

Grape Corporation purchased a machine in December of the current year.This was the only asset purchased during the current year.The machine was placed in service in January of the following year.No assets were purchased in the following year.Grape Corporation's cost recovery would begin:

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

All eligible real estate under MACRS is permitted one-half month of cost recovery in the month of disposition.

Motel buildings are classified as residential rental real estate.

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

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

Goodwill associated with the acquisition of a business cannot be amortized.

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

A purchased trademark is a § 197 intangible.

George purchases used seven-year class property at a cost of $200,000 on April 20, 2012.Determine George's cost recovery deduction for 2012 for alternative minimum tax purposes, assuming George does not elect § 179.

The statutory dollar cost recovery limits under § 280F do not apply to all automobiles.

Grape Corporation purchased a machine in December of the current year.This was the only asset purchased during the current year.The machine was placed in service in January of the following year.No assets were purchased in the following year.Grape Corporation's cost recovery would begin:

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

All eligible real estate under MACRS is permitted one-half month of cost recovery in the month of disposition.

Motel buildings are classified as residential rental real estate.

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

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