Exam 8: Depreciation,cost Recovery,amortization,and Depletion

James purchased a new business asset (three-year personality)on July 23,2010,at a cost of $50,000.He did not elect to expense any of the asset under § 179,nor did he elect straight-line cost recovery.If Congress reenacts additional first-year depreciation for 2010,James did elect not to take additional first-year depreciation.Determine the cost recovery deduction for 2010.

Antiques are not eligible for cost recovery.

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

Polly purchased a new hotel on July 20,2010,for $4,000,000.On January 20,2017,the building was sold.Determine the cost recovery deduction for the year of the sale.

On June 1,2010,Gabriella purchased a computer and peripheral equipment (five-year property)for $25,000.She used the assets 40% for business,50% for the production of income,and 10% for personal use.These are the only assets Gabriella purchased during the current year.Determine her total cost recovery deduction for the current year.

Hans purchased a new passenger automobile on August 17,2010,for $40,000.During the year the car was used 40% for business and 60% for personal use.Determine his cost recovery deduction for the car for 2010.

Tara purchased a machine for $40,000 to be used in her business.The cost recovery allowed and allowable for the three years the machine was used are as follows: If Tara sells the machine after three years for $15,000,how much gain should she recognize?

On July 17,2010,Kevin places in service a used automobile that cost $18,000.The car is used 80% for business and 20% for personal use.In 2011,he used the automobile 40% for business and 60% for personal use.Determine the cost recovery recapture for 2011.

George purchases used office furniture (seven-year class property)at a cost of $50,000 on April 20,2010.Determine George's cost recovery deduction for 2010 for alternative minimum tax purposes,assuming George does not elect § 179 and the maximum cost recovery deduction is taken for regular income tax purposes.

A taxpayer may elect to use the alternative depreciation system (ADS)on property used predominantly outside the United States.

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

If an automobile is placed in service in 2010,the limitation for cost recovery in 2012 will be based on the cost recovery limits for the year 2010.

On June 1,2010,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. )If Congress reenacts additional first-year depreciation for 2010,James does elect not to take additional first-year depreciation.Determine the cost recovery deduction for 2010.

Property used for the production of income is not eligible for § 179 expensing.

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

On August 20,2009,May signed a 10-year lease on a building for her business.On November 28,2010,May paid $80,000 for a leasehold improvement to the building.What is May's cost recovery deduction for the improvement in 2010?

If more than 40% of the value of property,other than real property,is placed in service during the last quarter,all of the property will be allowed 1.5 months of cost recovery.

Any § 179 expense amount that is carried forward is subject to the business income limitation in the carryforward year.

Once the more-than-50% business usage test is passed for listed property,it does not matter if the business usage for the property drops to 50% or less during the recovery period.

In a farming business,if an election is made to not have the uniform capitalization rules apply,cost is recovered using the ADS straight-line method.