Exam 7: Property Acquisitions and Cost Recovery Deductions

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 does not apply Section 179 expensing or bonus depreciation, but elects to use straight-line depreciation on all of its assets, how much is its 2018 depreciation deduction?

What is the purpose of the lease inclusion amount for automobiles?

Coralbay, a calendar-year corporation, purchased used office furniture for $240,000 and new machines for $1,880,000 in July 2018. What is Coralbay's maximum cost recovery deduction for 2018?

What are listed properties?

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: -Jack did not depreciate one of his machines that cost $40,000 because he had net operating losses for the last two years. Which of the following statements is true?

During the year, Garbin Corporation (a calendar-year corporation that manufactures furniture) purchased the following assets: In computing depreciation of these assets, which of the following averaging conventions will be used?

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: -MACRS depreciation

Section 179 expenses exceeding the annual cost limitation may be carried forward for five years only.

Depletion is the term used for the cost allocation of wasting assets.

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: -The after-tax cost of an asset increases if

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. To maximize its total cost recovery deduction, what was Sanjuro Corporation's cost recovery deduction for the used office equipment for 2018?

Morgan Corporation, a calendar-year corporation, purchased a $2,800,000 factory building in February, $950,000 of new machinery in April, $80,000 of new office furniture in August, $900,000 of used machinery in October, and $150,000 of additional new office furniture in December 2018. What is the corporation's first year maximum cost recovery deduction assuming the corporation expects at least $2,500,000 of income before depreciation deductions in 2018?

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. To maximize its total cost recovery deduction, what was Sanjuro Corporation's cost recovery deduction for the automobile for 2018?

Wolfgang, a calendar-year taxpayer, purchased residential rental realty in April of year 1 for $150,000 ($50,000 of which was for the land).

Wendell purchased a computer system for $6,000 on June 1, 2016. He kept records of his computer usage and found out he used the computer 45 percent of the time for his business, 20 percent for tracking his extensive investment portfolio and making trades, and the remaining time was for personal use in both years. a. Determine Wendell's depreciation deductions in 2016 and 2017. b. In 2018, Wendell's usage remained the same but he decided to dispose of the computer on November 1. Determine his 2018 depreciation deduction and his gain or loss on the disposition if he received $2,500 for the system.

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

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: -Mixed-use depreciation limitations

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 used office equipment for 2019?

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

On November 7, 2018, Wilson Corporation, a calendar-year taxpayer, acquires 7-year property for $1,090,000. This is the only property acquired this year. Section 179 expensing is elected, without application of bonus depreciation. What is Wilson's total depreciation deduction for 2018?