Exam 7: Property Acquisitions and Cost Recovery Deductions

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?

Gregory Corporation, a calendar-year corporation, purchased an office building in March of year 1. In September of year 17, it sold the building. What fraction must be applied to the MACRS percentage to determine the year 17 depreciation?

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 maximum cost recovery deduction for the warehouse for 2019?

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: -Barber Corporation purchased all the assets of TECO Corporation for $1,820,000. An appraisal yielded the following: the building had a fair market value of $1,200,000; equipment a value of $1,000,000; and office equipment a value of $400,000. What is the depreciable basis for the office equipment?

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 computer equipment for 2018?

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: -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 if they are then sold for their fair market value?

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: -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?

GFC Corporation purchased a new $50,000 automobile for business use by its president in June, 2018. A) Determine the corporation's maximum depreciation deduction in years 1 and 2. In what year will the corporation take its final depreciation deduction if the car is held until fully depreciated? B) How would your answers change if the automobile was purchased and placed in service in March of 2017? C) How would your answer change if the automobile was used, purchased, and placed in service in March of 2017?

Warren leases an auto valued at $18,750 for his business and personal use on May 1, 2017. His extensive records indicate he used the automobile 85 percent for business and 15 percent for personal use. He starts making monthly lease payments of $235 on June 1, 2017. What are the tax consequences for Warren in year 1 and 2 as a result of this lease contract?

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: -Alternative depreciation 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: -Mid-quarter convention

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: -Half-year convention

Conrad Corporation has a June 30 year end. What is the MACRS depreciation percentage deduction for the first year for a 5-year asset acquired October 15 under the mid-quarter convention.

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