Exam 7: Property Acquisitions and Cost Recovery Deductions

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Lopez Corporation is a calendar-year taxpayer. What is the MACRS depreciation percentage deduction for the last year for a 7-year asset acquired May 12 under the mid-quarter convention.

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

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Useful lives for realty include all of the following except:

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On June 20, 2018 Baker Corporation (a calendar-year taxpayer) acquired 5-year equipment costing $30,000 and on October 28, 2018, it acquired 7-year equipment costing $160,000. Baker did not claim Section 179 expensing or bonus depreciation and no other assets were acquired during the year. Baker's depreciation for 2018 is:

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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: -Listed property limitations

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What is the adjusted basis of an asset?

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

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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: 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. What is the maximum Section 179 deduction YumYum can claim for 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. What is the maximum Section 179 deduction YumYum can claim for 2018?

(Multiple Choice)
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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

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

(Essay)
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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

(Short Answer)
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Momee Corporation, a calendar-year corporation, bought only one asset in 2013, a crane it purchased for $700,000 on November 24. It disposed of the asset in April, 2018. What is its depreciation deduction for this asset in 2018 if cost recovery was determined using only regular MACRS?

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

(True/False)
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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?

(Multiple Choice)
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Soledad left her son Juan property valued at $700,000 when she died. Soledad paid $825,000 for the property but its adjusted basis was only $450,000 when she died. Juan did not want the building so he authorized the administrator to complete the sale of the building 6 months after Soledad's death for $650,000. Due to the decline in value of a number of Soledad's other assets after her death, the administrator elected the alternate valuation date for the assets. What is the realized and recognized gain or loss on the sale of the asset? Explain your answer.

(Essay)
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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: -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?

(Multiple Choice)
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If more than 40 percent of all personalty purchased during the year is placed in service during the last quarter of the year, the mid-quarter convention must be used.

(True/False)
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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

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Section 179 expensing does not apply to used property.

(True/False)
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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: -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:

(Multiple Choice)
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