Question 1

Capital improvements to real property must be depreciated over the remaining life of the property on which the improvements were made.

Accepted Answer

A) True 
 B)False

Question 2

Once the business use of listed property falls to 50% or below,the alternative depreciation system must be used for the current year and all subsequent years,even if the business use percentage increases to more than 50% in a subsequent year.

Accepted Answer

A) True 
 B)False

Question 3

In order for an asset to be depreciated in the year of purchase,it must be placed in service before year's end.

Accepted Answer

A) True 
 B)False

Question 4

Off-the-shelf computer software that is purchased for use in the taxpayer's trade or business is amortized over 36 months,or it can be immediately expensed under a Sec.179 election.

Accepted Answer

A) True 
 B)False

Question 5

Why would a taxpayer elect to capitalize and amortize intangible drilling costs (IDCs)rather than expense such costs?

Accepted Answer

An election to expense IDCs reduces pre-

Question 6

Under what circumstances might a taxpayer elect the alternative depreciation system for new equipment acquired this year?

Accepted Answer

A) A taxpayer has significant charitable contribution carryovers that will expire after this year. 
B) A taxpayer is undertaking a major R&E project which will result in an usually low marginal tax rate for the next few years. 
C) A taxpayer has significant NOL carryovers. 
D) All of the above. 
A) A taxpayer has significant charitable contribution carryovers that will expire after this year. 
B) A taxpayer is undertaking a major R&E project which will result in an usually low marginal tax rate for the next few years. 
C) A taxpayer has significant NOL carryovers. 
D) All of the above.

Question 7

On January 1,2016,Charlie Corporation acquires all of the net assets of Rocky Corporation for $2,000,000.The following intangible assets are included in the purchase agreement:   What is the total amount of amortization allowed in 2016?

Accepted Answer

A) $15,000 
B) $22,000 
C) $31,000 
D) $38,000 
A) $15,000 
B) $22,000 
C) $31,000 
D) $38,000

Question 8

For real property placed in service after 1986,depreciation under the MACRS system is calculated using the

Accepted Answer

A) straight-line method and a half-year convention in the year of acquisition and in the year of disposition. 
B) straight-line method and a mid-month convention in the year of acquisition and in the year of disposition. 
C) 200% DB method and a mid-month convention in the year of acquisition and in the year of disposition. 
D) 200% DB method and a half-year convention in the year of acquisition and in the year of disposition. 
A) straight-line method and a half-year convention in the year of acquisition and in the year of disposition. 
B) straight-line method and a mid-month convention in the year of acquisition and in the year of disposition. 
C) 200% DB method and a mid-month convention in the year of acquisition and in the year of disposition. 
D) 200% DB method and a half-year convention in the year of acquisition and in the year of disposition.

Question 9

If the business use of listed property is 50% or less of the total usage,the alternative depreciation system must be used.

Accepted Answer

A) True 
 B)False

Question 10

In August 2016,Tianshu acquires and places into service 7-year business equipment (tangible personal property qualifying under Sec.179)for $70,000.This is the only asset that she purchased during the year;her taxable income from her trade or business is $23,000.She decides to limit her 179 election to the maximum amount currently deductible in her business for the current year.What is her maximum cost recovery (Sec.179 and depreciation)deduction for 2015?

Accepted Answer

@#IMG-DLM& MACRS dep

Question 11

Enrico is a self-employed electrician.In May of the current year,Enrico acquired a used van (5-year property)for $12,000.He used the van 80% for business and 20% for personal purposes.Enrico does not take any Sec.179 deduction.The maximum depreciation deduction for is

Accepted Answer

A) $1,200. 
B) $2,400. 
C) $6,720. 
D) $1,920. 
A) $1,200. 
B) $2,400. 
C) $6,720. 
D) $1,920.

Question 12

Caitlyn purchases and places in service property costing $450,000 in 2016.She wants to elect the maximum Sec.179 deduction allowed.The property does not qualify for bonus depreciation.Her business income is $400,000.What is the amount of her allowable Sec.179 deduction and carryover,if any?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 13

Sec.179 tax benefits are recaptured if at any time an asset is converted to personal use.

Accepted Answer

A) True 
 B)False

Question 14

Terra Corporation,a calendar-year taxpayer,purchases and places into service machinery with a 7-year life that cost $640,000.Neither the mid-quarter convention,nor bonus depreciation apply.Terra elects to depreciate the maximum under Sec.179.Terra's taxable income for the year before the Sec.179 deduction is $700,000.What is Terra's total depreciation deduction related to this property (rounded to the nearest dollar)?

Accepted Answer

A) $640,000 
B) $520,006 
C) $91,416 
D) $591,416 
A) $640,000 
B) $520,006 
C) $91,416 
D) $591,416

Question 15

In accounting for research and experimental expenditures,all of the following alternatives are available with the exception of

Accepted Answer

A) expense R&E costs in the year paid or incurred. 
B) expense R&E costs in the year in which a product or process becomes marketable. 
C) defer and amortize R&E costs as a ratable deduction over a period of 60 months or more. 
D) capitalize and write off R&E costs only when the research project is abandoned or is worthless. 
A) expense R&E costs in the year paid or incurred. 
B) expense R&E costs in the year in which a product or process becomes marketable. 
C) defer and amortize R&E costs as a ratable deduction over a period of 60 months or more. 
D) capitalize and write off R&E costs only when the research project is abandoned or is worthless.

Question 16

If the business use of listed property decreases to 50% or less of the total usage,the property is subject to depreciation recapture.

Accepted Answer

A) True 
 B)False

Question 17

Intangible drilling and development costs (IDCs)may be deducted as an expense or may be capitalized.

Accepted Answer

A) True 
 B)False

Question 18

In November 2016,Kendall purchases a computer for $4,000.She does not use Sec.179 expensing,and the property does not qualify for bonus depreciation.She only uses the most accelerated depreciation method possible.The computer is the only personal property which she places in service during the year.What is her total depreciation deduction for this year?

Accepted Answer

A) $200 
B) $572 
C) $800 
D) $1,000 
A) $200 
B) $572 
C) $800 
D) $1,000

Question 19

Intangible assets are subject to MACRS depreciation.

Accepted Answer

A) True 
 B)False

Question 20

Land,buildings,equipment,and common stock are examples of tangible property.

Accepted Answer

A) True 
 B)False

Capital improvements to real property must be depreciated over the remaining life of the property on which the improvements were made.

Once the business use of listed property falls to 50% or below,the alternative depreciation system must be used for the current year and all subsequent years,even if the business use percentage increases to more than 50% in a subsequent year.

In order for an asset to be depreciated in the year of purchase,it must be placed in service before year's end.

Off-the-shelf computer software that is purchased for use in the taxpayer's trade or business is amortized over 36 months,or it can be immediately expensed under a Sec.179 election.

Why would a taxpayer elect to capitalize and amortize intangible drilling costs (IDCs)rather than expense such costs?

Under what circumstances might a taxpayer elect the alternative depreciation system for new equipment acquired this year?

On January 1,2016,Charlie Corporation acquires all of the net assets of Rocky Corporation for $2,000,000.The following intangible assets are included in the purchase agreement: What is the total amount of amortization allowed in 2016?

For real property placed in service after 1986,depreciation under the MACRS system is calculated using the

If the business use of listed property is 50% or less of the total usage,the alternative depreciation system must be used.

Enrico is a self-employed electrician.In May of the current year,Enrico acquired a used van (5-year property)for $12,000.He used the van 80% for business and 20% for personal purposes.Enrico does not take any Sec.179 deduction.The maximum depreciation deduction for is

Caitlyn purchases and places in service property costing $450,000 in 2016.She wants to elect the maximum Sec.179 deduction allowed.The property does not qualify for bonus depreciation.Her business income is $400,000.What is the amount of her allowable Sec.179 deduction and carryover,if any?

Sec.179 tax benefits are recaptured if at any time an asset is converted to personal use.

In accounting for research and experimental expenditures,all of the following alternatives are available with the exception of

If the business use of listed property decreases to 50% or less of the total usage,the property is subject to depreciation recapture.

Intangible drilling and development costs (IDCs)may be deducted as an expense or may be capitalized.

Intangible assets are subject to MACRS depreciation.

Land,buildings,equipment,and common stock are examples of tangible property.

An Introduction to Taxation

Determination of Tax

Gross Income: Inclusions

Gross Income: Exclusions

Property Transactions: Capital Gains and Losses

Deductions and Losses

Itemized Deductions

Losses and Bad Debts

Employee Expenses and Deferred Compensation

Accounting Periods and Methods

Property Transactions: Nontaxable Exchanges

Property Transactions: Section 1231 and Recapture

Special Tax Computation Methods, tax Credits, and Payment of Tax

Tax Research

Corporations

Partnerships and S Corporations

Taxes and Investment Planning

Filters

Exam 10: Depreciation, cost Recovery, amortization, and Depletion

Capital improvements to real property must be depreciated over the remaining life of the property on which the improvements were made.

Once the business use of listed property falls to 50% or below,the alternative depreciation system must be used for the current year and all subsequent years,even if the business use percentage increases to more than 50% in a subsequent year.

In order for an asset to be depreciated in the year of purchase,it must be placed in service before year's end.

Off-the-shelf computer software that is purchased for use in the taxpayer's trade or business is amortized over 36 months,or it can be immediately expensed under a Sec.179 election.

Why would a taxpayer elect to capitalize and amortize intangible drilling costs (IDCs)rather than expense such costs?

Under what circumstances might a taxpayer elect the alternative depreciation system for new equipment acquired this year?

On January 1,2016,Charlie Corporation acquires all of the net assets of Rocky Corporation for $2,000,000.The following intangible assets are included in the purchase agreement: What is the total amount of amortization allowed in 2016?

For real property placed in service after 1986,depreciation under the MACRS system is calculated using the

If the business use of listed property is 50% or less of the total usage,the alternative depreciation system must be used.

Enrico is a self-employed electrician.In May of the current year,Enrico acquired a used van (5-year property)for $12,000.He used the van 80% for business and 20% for personal purposes.Enrico does not take any Sec.179 deduction.The maximum depreciation deduction for is

Caitlyn purchases and places in service property costing $450,000 in 2016.She wants to elect the maximum Sec.179 deduction allowed.The property does not qualify for bonus depreciation.Her business income is $400,000.What is the amount of her allowable Sec.179 deduction and carryover,if any?

Sec.179 tax benefits are recaptured if at any time an asset is converted to personal use.

In accounting for research and experimental expenditures,all of the following alternatives are available with the exception of

If the business use of listed property decreases to 50% or less of the total usage,the property is subject to depreciation recapture.

Intangible drilling and development costs (IDCs)may be deducted as an expense or may be capitalized.

Intangible assets are subject to MACRS depreciation.

Land,buildings,equipment,and common stock are examples of tangible property.

An Introduction to Taxation

Determination of Tax

Gross Income: Inclusions

Gross Income: Exclusions

Property Transactions: Capital Gains and Losses

Deductions and Losses

Itemized Deductions

Losses and Bad Debts

Employee Expenses and Deferred Compensation

Accounting Periods and Methods

Property Transactions: Nontaxable Exchanges

Property Transactions: Section 1231 and Recapture

Special Tax Computation Methods, tax Credits, and Payment of Tax

Tax Research

Corporations

Partnerships and S Corporations

Taxes and Investment Planning

Filters