Exam 6: Property Acquisitions and Cost Recovery Deductions

Peter received his uncle's coin collection as a gift when it was valued at $150,000.Over the years,the uncle had purchased the coins for a total of $75,000.The uncle paid a $15,000 gift tax on the gift.What is Peter's basis in the coin collection?

Calvin gave his son ABC stock valued at $100,000 that he purchased for $50,000; he gave his daughter EFG stock valued at $100,000 that he purchased for $150,000.Calvin paid $30,000 in gift taxes on each of these gifts.What are the son's and daughter's bases in the stock received?

The after-tax cost of a depreciable asset is dependent on the purchaser's marginal tax rate.

Automobiles are subject to specific limitations on the amount of annual depreciation deductions.

Gribble Corporation acquires the Dibble Corporation for $7,200,000.On appraisal,the assets of Dibble Corporation have a fair market value of $6,800,000.The excess of the purchase price over the fair market value of the assets:

The mid-year and mid-month are acceptable conventions for depreciating personalty.

A donee's basis in a gift is always equal to the donor's basis.

The lease inclusion amount increases the deduction a person may take for business use of a leased automobile.

Which averaging conventions are used for MACRS depreciation?

The lease inclusion amount:

Rodriguez Corporation acquired 7-year property costing $50,000 on October 1,2015.This is the only property acquired this year and Rodriguez elects to expense the maximum amount under Section 179.Rodriguez's income before deducting depreciation is $20,000.What is the maximum amount that Rodriguez can deduction in 2015 for Section 179 expensing?

Sanjuro Corporation (a calendar-year corporation)purchased and placed in service the following assets during 2014: All assets are used 100% for business use.The warehouse building does not include the cost of the land on which it is located which was an additional $1,000,000.The corporation has $3,000,000 income from operations before calculating depreciation deductions.Sanjuro Corporation made whatever elections were necessary to maximize its overall depreciation deduction for 2014. What was Sanjuro Corporation's maximum total cost recovery deduction for 2014?

Zachary purchased a new car on August 1,2014 for $14,500.His records indicate that he uses the car 45 percent for business and 55 percent for personal use.What are his cost recovery deductions for 2014 and 2015?

13 Bonus depreciation and Section 179 expensing are never taken on the same asset.

Joe started a new business this year.He had purchased a computer two years ago for $4,000 and decided to use it in his business until he could afford a new system.He could purchase a new computer with the same specifications for $1,800,but his used computer is worth only $1,100.What is his computer's basis for depreciation?

The adjusted basis of an asset is:

Joan gives an asset valued at $12,000 with a basis of $10,000 to Mary; Joan dies six-months later leaving an asset valued at $10,000 with a basis of $12,000 to Larry.What are Mary's and Larry's bases in these assets?

What is the adjusted basis of an asset?

The cost of an asset with a useful life exceeding one year can be

The cost of assets with useful lives expected to extend for 2 or more years are capitalized with costs allocated over their useful lives.