Exam 10: Depreciation, Cost Recovery, Amortization, and Depletion

All of the following are true with regard to the alternative depreciation system except

In July of 2014, Pat acquired a new automobile for $28,000 and used the automobile 80% for business. No election is made regarding Sec. 179. Assuming her business use remains at 80%, Pat can take a maximum depreciation deduction in 2014 of

On its tax return, a corporation will use the same depreciation, amortization and depletion methods used in its financial statements issued to shareholders.

In May 2014, Cassie acquired a machine for $30,000 to use in her business. The machine is classified as 5-year property. Cassie does not expense the property under Sec. 179. Cassie's depreciation on the machine this year is

On May 1, 2012, Empire Properties Corp., a calendar year taxpayer, purchased an office building for $1,000,000, of which $400,000 was allocable to the land. The corporation sold the property this year on September 23, 2014. a. What was the corporation's depreciation for the building, using statutory percentages under MACRS for 2012? b. What was the corporation's depreciation for the building, using statutory percentages under MACRS for 2014?

Under MACRS, tangible personal property used in trade or business purchased and placed into service on March 1, 2014 should be depreciated for 10 months in 2014. Assume the business uses a calendar tax year.

Stellar Corporation purchased all of the assets of Bellavia Company as of January 1 this year for $1 million. Included in the assets acquired are the following intangible assets: What is Stellar's maximum amortization deduction for the year?

Discuss the options available regarding treatment of an amount paid in excess of the FMV of an acquired company's net assets in a business combination.

If the business usage of listed property is less than or equal to 50% of its total usage, depreciation is calculated using the

Prithi acquired and placed in service $190,000 of equipment on August 1, 2014 for use in her sole proprietorship. The equipment is 5-year recovery property. No other acquisitions are made during the year. Prithi elects to expense the maximum amount under Sec. 179. Prithi's total deductions for the year (including Sec. 179 and depreciation)are

Why would a taxpayer elect to use the alternative depreciation system rather than the MACRS rules?

The mid-quarter convention applies to personal and real property.

On November 3, this year, Kerry acquired and placed into service 7-year business equipment costing $80,000. In addition, on May 5th of this year, Kerry had also placed in business use 5-year recovery property costing $15,000. Kerry did not elect Sec. 179 immediate expensing. No other assets were purchased during the year. The depreciation for this year is

The straight-line method may be elected for depreciating tangible personal property placed in service after 1986.

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

Atiqa took out of service and sold a residential rental property on October 31 of this year. She had originally acquired the property ten years ago. The building (excluding the value of the land)cost $1,000,000. How much is her current year depreciation deduction?

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

Galaxy Corporation purchases specialty software from a software development firm for use in its business as of January 1 of the current year at a cost of $90,000. No hardware was acquired. How much of the cost can Galaxy deduct this year?

A taxpayer owns an economic interest in an oil and gas property. She is allowed to deduct the smaller of cost depletion or percentage depletion.

In April of 2013, Brandon acquired five-year listed property (not an automobile)for $30,000 and used it 70% for business. No election was made regarding Sec. 179 and bonus depreciation was not available. In 2014, his business use of the property dropped to 40%. Which of the following statements is true?