Question 1

The concept of depreciation is based on the premise that an asset benefits more than one accounting period.

Accepted Answer

A) True 
 B)False

Question 2

Taxable income for purposes of § 179 limited expensing is computed without regard to MACRS.

Accepted Answer

A) True 
 B)False

Question 3

Hotels placed in service after May 12,1993 have a cost recovery period of 39 years.

Accepted Answer

A) True 
 B)False

Question 4

Rick purchased a uranium interest for $10,000,000 on January 3,2010,when recoverable reserves were estimated at 200,000 units.A total of 10,000 units were extracted in 2010 and 7,000 units were sold in 2010.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 2010.

Accepted Answer

Cost depletion
@#IMG-DLM&
Percentage dep

Question 5

The costs of leasehold improvements owned by the lessee on residential rental real estate are recovered over a 27.5-year MACRS recovery period.

Accepted Answer

A) True 
 B)False

Question 6

In a farming business,MACRS straight-line cost recovery is required for all fruit bearing trees.

Accepted Answer

A) True 
 B)False

Question 7

An election to use straight-line under ADS is made on a class-by-class basis for property other than eligible real estate.

Accepted Answer

A) True 
 B)False

Question 8

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 9

If startup expenses total $60,000,the total amount is amortized over 180 months.

Accepted Answer

A) True 
 B)False

Question 10

On June 1,2010,Sam purchased new farm machinery for $50,000.Sam used the machinery in connection with his farming business.Sam does not elect to expense assets under § 179.Sam has,however,made an election to not have the uniform capitalization rules apply to the farming business.If Congress reenacts additional first-year depreciation for 2010,Sam does elect not to take additional first-year depreciation.Determine the cost recovery deduction for 2010.

Accepted Answer

A) $5,000. 
B) $7,500. 
C) $10,000. 
D) $12,500. 
E) None of the above. 
A) $5,000. 
B) $7,500. 
C) $10,000. 
D) $12,500. 
E) None of the above.

Question 11

Under the MACRS straight-line election for personality,the mid-quarter convention is not applicable.

Accepted Answer

A) True 
 B)False

Question 12

The statutory dollar cost recovery limits under § 280F apply to all passenger automobiles.

Accepted Answer

A) True 
 B)False

Question 13

Motel buildings are classified as residential rental real estate.

Accepted Answer

A) True 
 B)False

Question 14

The basis of property for cost recovery is reduced by the § 179 amount that is disallowed because of the business income limitation.

Accepted Answer

A) True 
 B)False

Question 15

On May 30,2010,Jane signed a 20-year lease on a factory building to use for her business.The lease begins on June 1,2010.In August of 2010,Jane paid $100,000 for leasehold improvements to the building.Determine Jane's cost recovery for the leasehold improvements for 2010.

Accepted Answer

A) $0. 
B) $963. 
C) $1,391. 
D) $5,000. 
E) None of the above. 
A) $0. 
B) $963. 
C) $1,391. 
D) $5,000. 
E) None of the above.

Question 16

If a new car that is used predominantly in business is placed in service in 2010,the statutory dollar cost recovery limit under § 280F will depend on whether the taxpayer takes MARCS or straight-line depreciation.

Accepted Answer

A) True 
 B)False

Question 17

Augie purchased one used asset during the year (five-year property)on November 10,2010,at a cost of $400,000.She made the § 179 election.The income from the business before the cost recovery deduction and the § 179 deduction was $100,000.Determine the total cost recovery deduction with respect to the asset for 2010.

Accepted Answer

A) $7,500. 
B) $92,500. 
C) $100,000. 
D) $250,000. 
E) None of the above. 
A) $7,500. 
B) $92,500. 
C) $100,000. 
D) $250,000. 
E) None of the above.

Question 18

Discuss the reason for the inclusion amount with respect to leased automobiles.

Accepted Answer

The purpose of the inclusion a

Question 19

For all property placed in service in 2010,the § 179 maximum deduction is limited to $250,000.

Accepted Answer

A) True 
 B)False

Question 20

Rod paid $950,000 for a new warehouse on April 14,2010.He sold the warehouse on September 29,2015.Determine the cost recovery deduction for 2010 and 2015.

Accepted Answer

2010: $950,000 * .01

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

The concept of depreciation is based on the premise that an asset benefits more than one accounting period.

Taxable income for purposes of § 179 limited expensing is computed without regard to MACRS.

Hotels placed in service after May 12,1993 have a cost recovery period of 39 years.

The costs of leasehold improvements owned by the lessee on residential rental real estate are recovered over a 27.5-year MACRS recovery period.

In a farming business,MACRS straight-line cost recovery is required for all fruit bearing trees.

An election to use straight-line under ADS is made on a class-by-class basis for property other than eligible real estate.

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

If startup expenses total $60,000,the total amount is amortized over 180 months.

Under the MACRS straight-line election for personality,the mid-quarter convention is not applicable.

The statutory dollar cost recovery limits under § 280F apply to all passenger automobiles.

Motel buildings are classified as residential rental real estate.

The basis of property for cost recovery is reduced by the § 179 amount that is disallowed because of the business income limitation.

On May 30,2010,Jane signed a 20-year lease on a factory building to use for her business.The lease begins on June 1,2010.In August of 2010,Jane paid $100,000 for leasehold improvements to the building.Determine Jane's cost recovery for the leasehold improvements for 2010.

If a new car that is used predominantly in business is placed in service in 2010,the statutory dollar cost recovery limit under § 280F will depend on whether the taxpayer takes MARCS or straight-line depreciation.

Discuss the reason for the inclusion amount with respect to leased automobiles.

For all property placed in service in 2010,the § 179 maximum deduction is limited to $250,000.

Rod paid $950,000 for a new warehouse on April 14,2010.He sold the warehouse on September 29,2015.Determine the cost recovery deduction for 2010 and 2015.

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

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

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

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

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

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

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters