Question 1

All of the following are characteristics of percentage depletion except:

Accepted Answer

A)  Depletion is determined using a statutory percentage times gross income. 
B)  Percentage depletion can exceed the property's cost. 
C)  Depletion in excess of cost results in a negative basis for property. 
D)  Is an investment incentive provision. 
A)  Depletion is determined using a statutory percentage times gross income. 
B)  Percentage depletion can exceed the property's cost. 
C)  Depletion in excess of cost results in a negative basis for property. 
D)  Is an investment incentive provision.

Question 2

What is the difference between depreciation, depletion, and amortization?

Accepted Answer

All three are cost recovery systems. Dep

Question 3

On June, 20, 2018, Simon Corporation (a calendar-year corporation) purchased and placed in service a new automobile costing $68,000. This vehicle is used 100% for business. Simon makes whatever elections are necessary to maximum its overall depreciation deduction for the year of acquisition. What is Simon Corporation's maximum cost recovery deduction for the automobile for 2020?

Accepted Answer

A)  $0 
B)  $5,760 
C)  $9,600 
D)  $15,000 
A)  $0 
B)  $5,760 
C)  $9,600 
D)  $15,000

Question 4

Sanjuro Corporation (a calendar-year corporation) purchased and placed in service the following assets during 2018:   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 2018.
What was Sanjuro Corporation's maximum total cost recovery deduction for 2018?

Accepted Answer

A)  $512,550 
B)  $1,731,707 
C)  $2,175,000 
D)  $2,228,052 
A)  $512,550 
B)  $1,731,707 
C)  $2,175,000 
D)  $2,228,052

Question 5

What limitations apply to the use of Section 179 expensing in 2018? What would have been different if this asset had been acquired in 2017?

Accepted Answer

In 2018, $1,000,000 of personalty is eli

Question 6

Josephine Company, a sole proprietorship whose owner is in the 35 percent marginal tax bracket, purchases five-year MACRS property in mid-year for $12,000. What is its after-tax cost of this asset if it uses a 6 percent discount rate for project evaluation? No Section 179 expensing or bonus depreciation is claimed for this property.

Accepted Answer

@#IMG-DLM& After-tax cost of t

Question 7

Rodriguez Corporation acquired 7-year property costing $450,000 on October 1, 2018. This is the only property acquired this year and Rodriguez elects to expense the maximum amount under Section 179 without applying bonus depreciation. Rodriguez's income before deducting depreciation is $320,000. What is the maximum amount that Rodriguez can deduct in 2018 for Section 179 expensing?

Accepted Answer

A)  $25,000 
B)  $130,000 
C)  $320,000 
D)  $450,000 
A)  $25,000 
B)  $130,000 
C)  $320,000 
D)  $450,000

Question 8

Research expenditures must be capitalized and amortized over the period the research is expected to benefit the business.

Accepted Answer

A) True 
 B)False

Question 9

Other Objective Questions
Indicated by a P for personalty, R for realty, or B for both personalty and realty which are subject to the following provisions:
-Reduction for personal use

Accepted Answer

The answer of Other Objective Questions
Indicated by a P for...

Question 10

YumYum Corporation (a calendar-year corporation) moved into a new office building adjacent to its manufacturing plant in 2018. It purchased and placed in service the following assets during 2018:   All assets are used 100% for business use. The office building does not include the cost of the land on which it is located that was an additional $300,000. The corporation had $900,000 income from operations before calculating depreciation deductions. YumYum Corporation made any elections available to maximize its overall depreciation deduction for 2018. What is its maximum depreciation deduction on the new automobile in 2018?

Accepted Answer

A)  $10,000 
B)  $11,160 
C)  $18,000 
D)  $30,000 
A)  $10,000 
B)  $11,160 
C)  $18,000 
D)  $30,000

Question 11

When would it be advisable to use the alternative depreciation system? Which properties must be depreciated by the alternative depreciation system?

Accepted Answer

It could be advisable to elect to use AD

Question 12

Sanjuro Corporation (a calendar-year corporation) purchased and placed in service the following assets during 2018:   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 2018.
What would be Sanjuro Corporation's cost recovery deduction for the computer equipment for 2019?

Accepted Answer

A)  $0 
B)  $44,000 
C)  $110,000 
D)  $220,000 
A)  $0 
B)  $44,000 
C)  $110,000 
D)  $220,000

Question 13

The lease inclusion amount:

Accepted Answer

A)  Increases the annual lease payments. 
B)  Applies to all leased autos regardless of value. 
C)  Is larger in the earlier years of the lease. 
D)  Is a substitute for the depreciation limits applicable to purchased autos. 
A)  Increases the annual lease payments. 
B)  Applies to all leased autos regardless of value. 
C)  Is larger in the earlier years of the lease. 
D)  Is a substitute for the depreciation limits applicable to purchased autos.

Question 14

The first and last years of MACRS depreciation deductions for a 7-year asset costing $20,000 using the half-year convention are:

Accepted Answer

A)  $4,000 and $1,152 
B)  $2,858 and $892 
C)  $2,000 and $576 
D)  $1,428 and $1,428 
A)  $4,000 and $1,152 
B)  $2,858 and $892 
C)  $2,000 and $576 
D)  $1,428 and $1,428

Question 15

Other Objective Questions
Indicated by a P for personalty, R for realty, or B for both personalty and realty which are subject to the following provisions:
-Section 179 expensing

Accepted Answer

The answer of Other Objective Questions
Indicated by a P for...

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Biggie Corporation can buy an auto for $29,500 (including taxes, license, and title fees) or it can lease the same car for $390 per month with $2,500 up front for tax, license, and fees. The corporation only keeps its cars for two years and it expects to be able to sell the car for $19,000 at the end of two years if it purchases the car. The corporation is in the 21 percent tax bracket, uses a 6 percent discount rate for evaluation, and assume that the lease inclusion amounts for years 1 and 2 are 70 and 150, respectively. Should Biggie Corporation buy or lease the auto in 2018 (assume lease payments are all made at the end of the year).

Accepted Answer

Biggie should lease the auto.
Purchase

Question 18

Sanjuro Corporation (a calendar-year corporation) purchased and placed in service the following assets during 2018:   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 2018. What was Sanjuro Corporation's cost recovery deduction for the warehouse in 2018?

Accepted Answer

A)  $55,052 
B)  $60,295 
C)  $70,536 
D)  $77,959 
A)  $55,052 
B)  $60,295 
C)  $70,536 
D)  $77,959

Question 19

YumYum Corporation (a calendar-year corporation) moved into a new office building adjacent to its manufacturing plant in 2018. It purchased and placed in service the following assets during 2018:   All assets are used 100% for business use. The office building does not include the cost of the land on which it is located that was an additional $300,000. The corporation had $900,000 income from operations before calculating depreciation deductions. If YumYum Corporation made all elections available to maximize its overall depreciation deduction for 2018, what is YumYum's maximum depreciation deduction for the office building in 2018?

Accepted Answer

A)  $17,281 
B)  $24,472 
C)  $28.302 
D)  $29,622 
A)  $17,281 
B)  $24,472 
C)  $28.302 
D)  $29,622

Question 20

Bangor Company incurred $70,000 of research costs in year 1. In May of year 2, it began to sell the products developed through this research. Which of the following is correct regarding these expenditures?

Accepted Answer

A)  Bangor can deduct $9,333 in year 2. 
B)  Bangor can deduct $35,000 of the costs in each of years 1 and 2 
C)  Bangor can deduct all $70,000 in year 2. 
D)  Bangor cannot deduct the expenditures unless it abandons the project. 
A)  Bangor can deduct $9,333 in year 2. 
B)  Bangor can deduct $35,000 of the costs in each of years 1 and 2 
C)  Bangor can deduct all $70,000 in year 2. 
D)  Bangor cannot deduct the expenditures unless it abandons the project.

All of the following are characteristics of percentage depletion except:

What is the difference between depreciation, depletion, and amortization?

What limitations apply to the use of Section 179 expensing in 2018? What would have been different if this asset had been acquired in 2017?

Research expenditures must be capitalized and amortized over the period the research is expected to benefit the business.

Other Objective Questions Indicated by a P for personalty, R for realty, or B for both personalty and realty which are subject to the following provisions: -Reduction for personal use

When would it be advisable to use the alternative depreciation system? Which properties must be depreciated by the alternative depreciation system?

The lease inclusion amount:

The first and last years of MACRS depreciation deductions for a 7-year asset costing $20,000 using the half-year convention are:

Other Objective Questions Indicated by a P for personalty, R for realty, or B for both personalty and realty which are subject to the following provisions: -Section 179 expensing

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

Bangor Company incurred $70,000 of research costs in year 1. In May of year 2, it began to sell the products developed through this research. Which of the following is correct regarding these expenditures?

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Deductions for Individuals and Tax Determination

Business Expenses

Property Dispositions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Estates, Gifts, and Trusts

Filters

Exam 7: Property Acquisitions and Cost Recovery Deductions

All of the following are characteristics of percentage depletion except:

What is the difference between depreciation, depletion, and amortization?

What limitations apply to the use of Section 179 expensing in 2018? What would have been different if this asset had been acquired in 2017?

Research expenditures must be capitalized and amortized over the period the research is expected to benefit the business.

Other Objective Questions Indicated by a P for personalty, R for realty, or B for both personalty and realty which are subject to the following provisions: -Reduction for personal use

When would it be advisable to use the alternative depreciation system? Which properties must be depreciated by the alternative depreciation system?

The lease inclusion amount:

The first and last years of MACRS depreciation deductions for a 7-year asset costing $20,000 using the half-year convention are:

Other Objective Questions Indicated by a P for personalty, R for realty, or B for both personalty and realty which are subject to the following provisions: -Section 179 expensing

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

Bangor Company incurred $70,000 of research costs in year 1. In May of year 2, it began to sell the products developed through this research. Which of the following is correct regarding these expenditures?

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Deductions for Individuals and Tax Determination

Business Expenses

Property Dispositions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Estates, Gifts, and Trusts

Filters