Question 1

How is the recovery period of an asset determined?

Accepted Answer

A)  Estimated useful life 
B)  Treasury regulation 
C)  Revenue Procedure 87-56 
D) Revenue Ruling 87-56 
E) None of these 
A)  Estimated useful life 
B)  Treasury regulation 
C)  Revenue Procedure 87-56 
D) Revenue Ruling 87-56 
E) None of these

Question 2

Which of the following assets is eligible for bonus depreciation?

Accepted Answer

A)  Used office machinery 
B)  Qualified leasehold improvements 
C)  A new delivery truck 
D) Used office furniture 
E) All of these 
A)  Used office machinery 
B)  Qualified leasehold improvements 
C)  A new delivery truck 
D) Used office furniture 
E) All of these

Question 3

Suvi, Inc. purchased two assets during the current year (a full 12-month tax year). Suvi placed in service computer equipment (5-year property) on August 10 with a basis of $20,000 and machinery (7-year property) on November 18 with a basis of $10,000. Calculate the maximum depreciation expense, rounded to a whole number (ignoring §179 and bonus depreciation):

Accepted Answer

A)  $857 
B)  $3,357 
C)  $5,429 
D) $6,000 
E) None of these 
A)  $857 
B)  $3,357 
C)  $5,429 
D) $6,000 
E) None of these

Question 4

Which is not an allowable method under MACRS?

Accepted Answer

A)  150 percent declining balance 
B)  200 percent declining balance 
C)  Straight line 
D) Sum of the years digits 
E) All of these are allowable methods under MACRS 
A)  150 percent declining balance 
B)  200 percent declining balance 
C)  Straight line 
D) Sum of the years digits 
E) All of these are allowable methods under MACRS

Question 5

Assume that Yuri acquires a competitor's assets on May 1st. The purchase price was $500,000. Of the amount, $325,000 is allocated to tangible assets and $175,000 is allocated to goodwill (a §197 intangible asset). What is Yuri's amortization expense for the current year, rounded to the nearest whole number?

Accepted Answer

$7,778
Explanation: The full-m

Question 6

Janey purchased machinery on April 8th of the current year. The relevant costs for the year are as follows: machinery for $10,000, $800 shipping, $50 for delivery insurance, $500 for installation, $750 for sales tax, $150 for the annual tune up, and $200 of property taxes (an annual tax on business property). What is Janey's tax basis for the machinery?

Accepted Answer

$12,100
Explanation: An asset's basis co

Question 7

Roth, LLC purchased only one asset during the current year. Roth placed in service computer equipment (5-year property) on November 1st with a basis of $42,500. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation).

Accepted Answer

$2,125
Explanation: The asset's recovery

How is the recovery period of an asset determined?

Which of the following assets is eligible for bonus depreciation?

Which is not an allowable method under MACRS?

Roth, LLC purchased only one asset during the current year. Roth placed in service computer equipment (5-year property) on November 1^st with a basis of $42,500. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation).

Business Income, Deductions, and Accounting Methods

Property Dispositions

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S: Corporations

State and Local Taxes

The US Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters

Exam 2: Property Acquisition and Cost Recovery

How is the recovery period of an asset determined?

Which of the following assets is eligible for bonus depreciation?

Which is not an allowable method under MACRS?

Roth, LLC purchased only one asset during the current year. Roth placed in service computer equipment (5-year property) on November 1st with a basis of $42,500. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation).

Business Income, Deductions, and Accounting Methods

Property Dispositions

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S: Corporations

State and Local Taxes

The US Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters

Roth, LLC purchased only one asset during the current year. Roth placed in service computer equipment (5-year property) on November 1^st with a basis of $42,500. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation).