Exam 10: Property Acquisition and Cost Recovery

Taylor LLC purchased an automobile for $55,000 on July 5, 2018. What is Taylor's maximum depreciation expense for 2018 if its business use percentage is 100 percent?

The MACRS depreciation tables automatically switch to the straight-line method when the straight-line method yields a higher annual depreciation amount than the declining balance method.

Like financial accounting, most acquired business property must be capitalized for tax purposes.

Taxpayers use the half-year convention for all assets.

Simmons LLC purchased an office building and land several years ago for $250,000. The purchase price was allocated as follows: $200,000 to the building and $50,000 to the land. The property was placed in service on October 2. If the property is disposed of on February 27 during the 10^th year, calculate Simmons' maximum depreciation in the 10^th year. (Use MACRS Table 5) EXHIBIT 10-6

In general, a taxpayer should select longer-lived property for the §179 immediate expensing election.

Bonus depreciation is used as a stimulus tool by tax policy makers.

Which of the allowable methods allows the most accelerated depreciation?

Alexandra purchased a $55,000 automobile during 2018. The business use was 70 percent. What is the allowable depreciation for the current year (ignore any possible bonus depreciation)? (Use Exhibit 10-10)