Question 1

Tax cost recovery methods include depreciation, amortization, and depletion.

Accepted Answer

A) True 
 B)False

Question 2

Racine started a new business in the current year. She incurred $52,000 of start-up costs. If her business started on November 23rd of the current year, what is the total expense she may deduct with respect to the start-up costs for her initial year, rounded to the nearest whole number?

Accepted Answer

A)  $2,555. 
B)  $3,544. 
C)  $5,522. 
D)  $52,000. 
E)  None of the choices are correct. 
A)  $2,555. 
B)  $3,544. 
C)  $5,522. 
D)  $52,000. 
E)  None of the choices are correct.

Question 3

The method for tax amortization is always the straight-line method.

Accepted Answer

A) True 
 B)False

Question 4

Depreciation is currently computed under the Modified Accelerated Cost Recovery System (MACRS).

Accepted Answer

A) True 
 B)False

Question 5

Taxpayers may always expense a portion of start-up costs and organizational expenditures.

Accepted Answer

A) True 
 B)False

Question 6

Sairra, LLC purchased only one asset during the current year (a full 12-month tax year). Sairra placed in service furniture (7-year property) on April 16 with a basis of $25,000. Calculate the maximum depreciation expense for the current year? (ignoring §179 and bonus depreciation). (Use MACRS Table 1) (Round final answer to the nearest whole number.)

Accepted Answer

A)  $1,786. 
B)  $3,573. 
C)  $4,463. 
D)  $5,000. 
E)  None of the choices are correct. 
A)  $1,786. 
B)  $3,573. 
C)  $4,463. 
D)  $5,000. 
E)  None of the choices are correct.

Question 7

Which of the following business assets is not depreciated?

Accepted Answer

A)  Automobile. 
B)  Building. 
C)  Patent. 
D)  Machinery. 
E)  All of the assets are depreciated. 
A)  Automobile. 
B)  Building. 
C)  Patent. 
D)  Machinery. 
E)  All of the assets are depreciated.

Question 8

Boxer LLC has acquired various types of assets recently used 100% in its trade or business. Below is a list of assets acquired during 2017 and 2018:
   Boxer did not elect §179 expense and elected out of bonus depreciation in 2017, but would like to take advantage of the §179 expense and bonus depreciation for 2018 (assume that taxable income is sufficient). Calculate Boxer's maximum depreciation expense for 2018. (Use MACRS Table 1, Table 5 and Exhibit 10-10 ) (Round final answer to the nearest whole number.)

Accepted Answer

$249,627.
§179 allows expensing of all t

Question 9

PC Mine purchased a platinum deposit for $3,500,000. It estimated it would extract 17,000 ounces of platinum from the deposit. PC mined the platinum and sold it reporting gross receipts of $500,000 and $8 million for years 1 and 2, respectively. During years 1 and 2, PC reported net income (loss) from the platinum deposit activity in the amount of ($100,000) and $3,800,000, respectively. In years 1 and 2, PC actually extracted 2,000 and 8,000 ounces of platinum. What is PC's depletion expense for years 1 and 2 if the applicable percentage depletion for platinum is 22 percent? (Round final answer to the nearest whole number.)

Accepted Answer

Year 1: $411,765.
Year 2: $1,760,000.
PC

Question 10

If the business use percentage for listed property falls below 50 percent, the only adjustment is all future depreciation must be calculated under the straight-line method.

Accepted Answer

A) True 
 B)False

Question 11

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 (ignoring §179 and bonus depreciation). (Use MACRS Table 1) (Round final answer to the nearest whole number.)

Accepted Answer

A)  $857. 
B)  $3,357. 
C)  $5,429. 
D)  $6,000. 
E)  None of the choices are correct. 
A)  $857. 
B)  $3,357. 
C)  $5,429. 
D)  $6,000. 
E)  None of the choices are correct.

Question 12

In general, major integrated oil and gas producers may take the greater of cost or percentage depletion.

Accepted Answer

A) True 
 B)False

Question 13

The manner in which a business amortizes a patent or copyright is the same whether the business directly purchases the patent or copyright or whether it self-creates the intangible.

Accepted Answer

A) True 
 B)False

Question 14

Oksana started an LLC on November 2 of the current year. She incurred $30,000 of start-up costs. How much of the start-up costs can be immediately expensed for the year? How much amortization may Oksana deduct in the first year?

Accepted Answer

$5,278.
$5,000 of start-up exp

Question 15

Business assets that tend to be used for both business and personal purposes are referred to as listed property.

Accepted Answer

A) True 
 B)False

Question 16

Property expensed under the §179 immediate expensing election is not included in the 40 percent test to determine whether the mid-quarter convention must be used.

Accepted Answer

A) True 
 B)False

Question 17

Daschle LLC completed some research and development during June of the current year. The related costs were $60,000. If Daschle wants to capitalize and amortize the costs as quickly as possible, what is the total amortization expense Daschle may deduct during the current year?

Accepted Answer

A)  $0. 
B)  $6,500. 
C)  $7,000. 
D)  $12,000. 
E)  None of the choices are correct. 
A)  $0. 
B)  $6,500. 
C)  $7,000. 
D)  $12,000. 
E)  None of the choices are correct.

Question 18

If tangible personal property is depreciated using the half-year convention and is disposed of during the first quarter of a subsequent year, the taxpayer must use the mid-quarter convention for the year of disposition.

Accepted Answer

A) True 
 B)False

Question 19

Columbia LLC only purchased one asset this year. Columbia LLC placed in service on July 9, 2018 machinery and equipment (7-year property) with a basis of $2,750,000. Assume that Columbia has sufficient income to avoid any limitations. Calculate the maximum depreciation expense including §179 expensing (but ignoring bonus expensing) for the year. (Use MACRS Table 2) (Round final answer to the nearest whole number.)

Accepted Answer

$1,035,800.
The $1,000,000 §179 expense

Question 20

Reid acquired two assets in 2018: computer equipment (5-year property) acquired on August 6th with a basis of $1,000,000 and machinery (7-year property) on November 9th with a basis of $1,000,000. Assume that Reid has sufficient income to avoid any limitations. Calculate the maximum depreciation expense including §179 expensing (but not bonus expensing). (Use MACRS Table 1)

Accepted Answer

$1,200,000.
The $1,000,000 §179 expense

Tax cost recovery methods include depreciation, amortization, and depletion.

Racine started a new business in the current year. She incurred $52,000 of start-up costs. If her business started on November 23^rd of the current year, what is the total expense she may deduct with respect to the start-up costs for her initial year, rounded to the nearest whole number?

The method for tax amortization is always the straight-line method.

Depreciation is currently computed under the Modified Accelerated Cost Recovery System (MACRS).

Taxpayers may always expense a portion of start-up costs and organizational expenditures.

Which of the following business assets is not depreciated?

If the business use percentage for listed property falls below 50 percent, the only adjustment is all future depreciation must be calculated under the straight-line method.

In general, major integrated oil and gas producers may take the greater of cost or percentage depletion.

The manner in which a business amortizes a patent or copyright is the same whether the business directly purchases the patent or copyright or whether it self-creates the intangible.

Oksana started an LLC on November 2 of the current year. She incurred $30,000 of start-up costs. How much of the start-up costs can be immediately expensed for the year? How much amortization may Oksana deduct in the first year?

Business assets that tend to be used for both business and personal purposes are referred to as listed property.

Property expensed under the §179 immediate expensing election is not included in the 40 percent test to determine whether the mid-quarter convention must be used.

Daschle LLC completed some research and development during June of the current year. The related costs were $60,000. If Daschle wants to capitalize and amortize the costs as quickly as possible, what is the total amortization expense Daschle may deduct during the current year?

If tangible personal property is depreciated using the half-year convention and is disposed of during the first quarter of a subsequent year, the taxpayer must use the mid-quarter convention for the year of disposition.

An Introduction to Tax

Tax Compliance, the IRS, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

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 10: Property Acquisition and Cost Recovery

Tax cost recovery methods include depreciation, amortization, and depletion.

Racine started a new business in the current year. She incurred $52,000 of start-up costs. If her business started on November 23rd of the current year, what is the total expense she may deduct with respect to the start-up costs for her initial year, rounded to the nearest whole number?

The method for tax amortization is always the straight-line method.

Depreciation is currently computed under the Modified Accelerated Cost Recovery System (MACRS).

Taxpayers may always expense a portion of start-up costs and organizational expenditures.

Which of the following business assets is not depreciated?

If the business use percentage for listed property falls below 50 percent, the only adjustment is all future depreciation must be calculated under the straight-line method.

In general, major integrated oil and gas producers may take the greater of cost or percentage depletion.

The manner in which a business amortizes a patent or copyright is the same whether the business directly purchases the patent or copyright or whether it self-creates the intangible.

Oksana started an LLC on November 2 of the current year. She incurred $30,000 of start-up costs. How much of the start-up costs can be immediately expensed for the year? How much amortization may Oksana deduct in the first year?

Business assets that tend to be used for both business and personal purposes are referred to as listed property.

Property expensed under the §179 immediate expensing election is not included in the 40 percent test to determine whether the mid-quarter convention must be used.

Daschle LLC completed some research and development during June of the current year. The related costs were $60,000. If Daschle wants to capitalize and amortize the costs as quickly as possible, what is the total amortization expense Daschle may deduct during the current year?

If tangible personal property is depreciated using the half-year convention and is disposed of during the first quarter of a subsequent year, the taxpayer must use the mid-quarter convention for the year of disposition.

An Introduction to Tax

Tax Compliance, the IRS, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

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

Racine started a new business in the current year. She incurred $52,000 of start-up costs. If her business started on November 23^rd of the current year, what is the total expense she may deduct with respect to the start-up costs for her initial year, rounded to the nearest whole number?