Exam 10: Property Acquisition and Cost Recovery

An office building was purchased several years ago on December 9th for $2,500,000.The purchase price was allocated as follows: building $1,900,000,landscaping $100,000,and land $500,000.During the current year,the 10^th year,the building was sold on March 10^th.Calculate the maximum depreciation deduction for the real property during the current year,rounded to the nearest whole number.(Use MACRS Table 5.)

Tom Tom LLC purchased a rental house and land during the current year for $150,000.The purchase price was allocated as follows: $100,000 to the building and $50,000 to the land.The property was placed in service on May 22.Calculate Tom Tom's maximum depreciation for this first year.(Use MACRS Table 3.)

The basis for a personal-use asset converted to business use is the lesser of the asset's cost basis or fair market value on the date of the transfer or conversion.

The mid-month convention applies to real property in the year of acquisition and disposition.

Amit purchased two assets during the current year.On April 16th Amit placed in service computer equipment (five-year property)with a basis of $5,000 and on September 9th placed in service furniture (seven-year property)with a basis of $20,000.Calculate the maximum depreciation deduction (ignoring §179 and bonus depreciation).(Use MACRS Table 1.)

Which of the following business assets is not depreciated?

Limits are placed on the depreciation of luxury automobiles.

Suvi,Inc.purchased two assets during the current year (a full 12-month tax year).On August 10 Suvi placed in service computer equipment (five-year property)with a basis of $20,000 and on November 18 placed in service machinery (seven-year property)with a basis of $10,000.Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation).(Use MACRS Table 1.)(Round final answer to the nearest whole number.)

Clay LLC placed in service machinery and equipment (seven-year property)with a basis of $3,450,000 on June 6,2019.Assume that Clay has sufficient income to avoid any limitations.Calculate the maximum depreciation expense including §179 expensing (ignoring any possible bonus depreciation).(Use MACRS Table 1.)(Round final answer to the nearest whole number.)

Used property is eligible for bonus depreciation.

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.)

Which is not an allowable method under MACRS?

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

If tangible personal property is depreciated using the half-year convention and is disposed of during the first quarter of a subsequent year,the taxpayer must use the mid-quarter convention for the year of disposition.

Deirdre's business purchased two assets during the current year (a full 12-month tax year).On January 20 Deirdre placed in service computer equipment (five-year property)with a basis of $15,000 and on September 1 placed in service machinery (seven-year property)with a basis of $15,000.Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation).(Use MACRS Half-Year Convention Table.)(Round final answer to the nearest whole number.)

Taxpayers use the half-year convention for all assets.

Which of the allowable methods allows the most accelerated depreciation?

Roth LLC purchased only one asset during the current year.On August 1st Roth placed in service office equipment (seven-year property)with a basis of $42,500.Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation).(Use MACRS Half-Year Convention Table.)(Round final answer to the nearest whole number.)

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

Yasmin purchased two assets during the current year.On May 26th Yasmin placed in service computer equipment (five-year property)with a basis of $10,000 and on December 9th placed in service machinery (seven-year property)with a basis of $10,000.Calculate the maximum depreciation deduction (ignoring §179 and bonus depreciation).(Use MACRS Table 2.)