Question 1

Depletion is the method taxpayers use to recover their capital investment in natural resources.

Accepted Answer

A) True 
 B)False

Question 2

Poplock LLC purchased a warehouse and land during the current year for $350,000.The purchase price was allocated as follows: $275,000 to the building and $75,000 to the land.The property was placed in service on August 12.Calculate Poplock's maximum depreciation for this first year.(Use MACRS Table 5.)(Round final answer to the nearest whole number.)

Accepted Answer

A) $2,648. 
B) $3,371. 
C) $3,751. 
D) $4,774. 
E) None of the choices are correct. 
A) $2,648. 
B) $3,371. 
C) $3,751. 
D) $4,774. 
E) None of the choices are correct.

Question 3

Used property is eligible for bonus depreciation.

Accepted Answer

A) True 
 B)False

Question 4

The manner in which a business amortizes a patent or copyright is the same whether the business directly purchases the patent or copyright or whether it self-creates the intangible.

Accepted Answer

A) True 
 B)False

Question 5

Assume that Brittany acquires a competitor's assets on September 30th of Year 1 for $350,000.Of that amount, $300,000 is allocated to tangible assets and $50,000 is allocated equally to two §197 intangible assets (goodwill and a one-year noncompete agreement).Given that the noncompete agreement expires on September 30th of Year 2, what is Brittany's amortization deduction for the second year? (Round final answer to the nearest whole number.)

Accepted Answer

A) $0 
B) $1,667 
C) $2,917 
D) $3,333 
E) None of the choices are correct. 
A) $0 
B) $1,667 
C) $2,917 
D) $3,333 
E) None of the choices are correct.

Question 6

Which of the following assets is not eligible for bonus depreciation?

Accepted Answer

A) Used office machinery 
B) Qualified improvement property 
C) A new delivery truck 
D) Used office furniture 
E) All of the choices are correct. 
A) Used office machinery 
B) Qualified improvement property 
C) A new delivery truck 
D) Used office furniture 
E) All of the choices are correct.

Question 7

Daschle LLC completed some research and development during June of the current year.The related costs were $60,000.If Daschle wants to capitalize and amortize the costs as quickly as possible, what is the total amortization amount Daschle may deduct during the current year?

Accepted Answer

A) $0. 
B) $6,500. 
C) $7,000. 
D) $12,000. 
E) None of the choices are correct. 
A) $0. 
B) $6,500. 
C) $7,000. 
D) $12,000. 
E) None of the choices are correct.

Question 8

The §179 immediate expensing election phases out based upon a taxpayer's taxable income.

Accepted Answer

A) True 
 B)False

Question 9

Tax cost recovery methods do not include:

Accepted Answer

A) Amortization. 
B) Capitalization. 
C) Depletion. 
D) Depreciation. 
E) All of the choices are tax cost recovery methods. 
A) Amortization. 
B) Capitalization. 
C) Depletion. 
D) Depreciation. 
E) All of the choices are tax cost recovery methods.

Question 10

Which of the allowable methods allows the most accelerated depreciation?

Accepted Answer

A) 150 percent declining balance. 
B) 200 percent declining balance. 
C) Straight-line. 
D) Sum-of-the-years'-digits. 
E) None of the methods would allow accelerated depreciation. 
A) 150 percent declining balance. 
B) 200 percent declining balance. 
C) Straight-line. 
D) Sum-of-the-years'-digits. 
E) None of the methods would allow accelerated depreciation.

Question 11

Which is not an allowable method under MACRS?

Accepted Answer

A) 150 percent declining balance. 
B) 200 percent declining balance. 
C) Straight-line. 
D) Sum-of-the-years'-digits. 
E) All of the choices are allowable methods under MACRS. 
A) 150 percent declining balance. 
B) 200 percent declining balance. 
C) Straight-line. 
D) Sum-of-the-years'-digits. 
E) All of the choices are allowable methods under MACRS.

Question 12

If a taxpayer places only one asset (a building)in service during the fourth quarter of the year, the mid-quarter convention must be used.

Accepted Answer

A) True 
 B)False

Question 13

During August of the prior year, Julio purchased an apartment building that he used as a rental property.The basis was $1,400,000.Calculate the maximum depreciation deduction during the current year.(Use MACRS Table 3.)

Accepted Answer

$50,904.
The asset's recovery

Question 14

All assets subject to amortization have the same recovery period.

Accepted Answer

A) True 
 B)False

Question 15

An office desk is an example of:

Accepted Answer

A) Personal property. 
B) Personal-use property. 
C) Real property. 
D) Business property. 
E) Personal property and business property. 
A) Personal property. 
B) Personal-use property. 
C) Real property. 
D) Business property. 
E) Personal property and business property.

Question 16

PC Mine purchased a platinum deposit for $3,500,000.It estimated it would extract 17,000 ounces of platinum from the deposit.PC mined the platinum and sold it, reporting gross receipts of $500,000 and $8 million for Years 1 and 2, respectively.During Years 1 and 2, PC reported net income (loss)from the platinum deposit activity in the amount of ($100,000)and $3,800,000, respectively.In Years 1 and 2, PC actually extracted 2,000 and 8,000 ounces of platinum.What is PC's depletion deduction for Years 1 and 2 if the applicable percentage depletion for platinum is 22 percent? (Round final answer to the nearest whole number.)

Accepted Answer

Year 1: $411,765.
Year 2: $1,760,000.
PC

Question 17

Tasha LLC purchased furniture (seven-year property)on April 20 for $20,000 and used the half-year convention to depreciate it.Tasha did not take §179 or bonus depreciation in the year it acquired the furniture.During the current year, which is the fourth year Tasha LLC owned the property, the property was disposed of on December 15.Calculate the maximum depreciation expense.(Use MACRS Table 2 and Exhibit 10-6.)(Round final answer to the nearest whole number.)

Accepted Answer

A) $898. 
B) $2,095. 
C) $1,249. 
D) $2,498. 
E) None of the choices are correct. 
A) $898. 
B) $2,095. 
C) $1,249. 
D) $2,498. 
E) None of the choices are correct.

Question 18

Kristine sold two assets on March 20th of the current year.The first was machinery with an original basis of $51,000, currently in the fourth year of depreciation, and depreciated under the half-year convention.The second was furniture with an original basis of $16,000, placed in service during the fourth quarter, currently in the third year of depreciation, and depreciated under the mid-quarter convention.What is Kristine's depreciation deduction for the current year if the depreciation recovery period is seven years? (Use MACRS Table 1 and Table 2 and Exhibit 10-6.)(Round final answer to the nearest whole number.)

Accepted Answer

$3,579.
The depreciation on th

Question 19

Which of the following assets is eligible for §179 expensing?

Accepted Answer

A) Used office machinery. 
B) Qualified improvement property. 
C) A new delivery truck. 
D) Used office furniture. 
E) All of the choices are correct. 
A) Used office machinery. 
B) Qualified improvement property. 
C) A new delivery truck. 
D) Used office furniture. 
E) All of the choices are correct.

Question 20

Alexandra purchased a $55,000 automobile during 2019.The business use was 70 percent.What is the allowable depreciation for the current year? (Ignore any possible bonus depreciation.)(Use Exhibit 10-10.)

Accepted Answer

$7,000.
The maximum depreciation for a l

Depletion is the method taxpayers use to recover their capital investment in natural resources.

Used property is eligible for bonus depreciation.

The manner in which a business amortizes a patent or copyright is the same whether the business directly purchases the patent or copyright or whether it self-creates the intangible.

Which of the following assets is not eligible for bonus depreciation?

Daschle LLC completed some research and development during June of the current year.The related costs were $60,000.If Daschle wants to capitalize and amortize the costs as quickly as possible, what is the total amortization amount Daschle may deduct during the current year?

The §179 immediate expensing election phases out based upon a taxpayer's taxable income.

Tax cost recovery methods do not include:

Which of the allowable methods allows the most accelerated depreciation?

Which is not an allowable method under MACRS?

If a taxpayer places only one asset (a building)in service during the fourth quarter of the year, the mid-quarter convention must be used.

During August of the prior year, Julio purchased an apartment building that he used as a rental property.The basis was $1,400,000.Calculate the maximum depreciation deduction during the current year.(Use MACRS Table 3.)

All assets subject to amortization have the same recovery period.

An office desk is an example of:

Which of the following assets is eligible for §179 expensing?

Alexandra purchased a $55,000 automobile during 2019.The business use was 70 percent.What is the allowable depreciation for the current year? (Ignore any possible bonus depreciation.)(Use Exhibit 10-10.)

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Gross Income and Exclusions

Individual for Agi Deductions

Individual From Agi Deductions

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Dispositions

Entities Overview

Corporate Formations and Operations

Corporate Nonliquidating and Liquidating Distributions

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

Filters

Exam 10: Property Acquisition and Cost Recovery

Depletion is the method taxpayers use to recover their capital investment in natural resources.

Used property is eligible for bonus depreciation.

The manner in which a business amortizes a patent or copyright is the same whether the business directly purchases the patent or copyright or whether it self-creates the intangible.

Which of the following assets is not eligible for bonus depreciation?

Daschle LLC completed some research and development during June of the current year.The related costs were $60,000.If Daschle wants to capitalize and amortize the costs as quickly as possible, what is the total amortization amount Daschle may deduct during the current year?

The §179 immediate expensing election phases out based upon a taxpayer's taxable income.

Tax cost recovery methods do not include:

Which of the allowable methods allows the most accelerated depreciation?

Which is not an allowable method under MACRS?

If a taxpayer places only one asset (a building)in service during the fourth quarter of the year, the mid-quarter convention must be used.

During August of the prior year, Julio purchased an apartment building that he used as a rental property.The basis was $1,400,000.Calculate the maximum depreciation deduction during the current year.(Use MACRS Table 3.)

All assets subject to amortization have the same recovery period.

An office desk is an example of:

Which of the following assets is eligible for §179 expensing?

Alexandra purchased a $55,000 automobile during 2019.The business use was 70 percent.What is the allowable depreciation for the current year? (Ignore any possible bonus depreciation.)(Use Exhibit 10-10.)

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Gross Income and Exclusions

Individual for Agi Deductions

Individual From Agi Deductions

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Dispositions

Entities Overview

Corporate Formations and Operations

Corporate Nonliquidating and Liquidating Distributions

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

Filters