Question 1

Bonus depreciation is used as a stimulus tool by tax policy makers.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following business assets is not depreciated?

Accepted Answer

A) Automobile 
B) Building 
C) Patent 
D) Machinery 
E) All of the assets are depreciated. 
A) Automobile 
B) Building 
C) Patent 
D) Machinery 
E) All of the assets are depreciated.

Question 3

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.)

Accepted Answer

A) $1,605 
B) $2,273 
C) $2,408 
D) $3,410 
E) None of the choices are correct. 
A) $1,605 
B) $2,273 
C) $2,408 
D) $3,410 
E) None of the choices are correct.

Question 4

An asset's capitalized cost basis includes only the actual purchase price, whereas expenses to purchase, prepare the asset for use, and begin using the asset are immediately expensed.

Accepted Answer

A) True 
 B)False

Question 5

Businesses may immediately expense research and experimentation expenditures, or they may elect to capitalize these costs and amortize them using the straight-line method over a period of not less than 60 months.

Accepted Answer

A) True 
 B)False

Question 6

Daschle LLC completed some research and development during June of the current year. The related costs were $72,600. 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) $7,865 
C) $8,470 
D) $14,520 
E) None of the choices are correct. 
A) $0 
B) $7,865 
C) $8,470 
D) $14,520 
E) None of the choices are correct.

Question 7

In general, major integrated oil and gas producers may take the greater of cost or percentage depletion.

Accepted Answer

A) True 
 B)False

Question 8

In general, a taxpayer should select longer-lived property for the §179 immediate expensing election.

Accepted Answer

A) True 
 B)False

Question 9

Jaussi purchased a computer several years ago for $2,200 and used it for personal purposes. On November 10 th of the current year, when the fair market value of the computer was $800, Jaussi converted it to business use. What is Jaussi's tax basis for the computer?

Accepted Answer

$800. When personal property i

Question 10

The §179 immediate expensing election phases out based upon the amount of tangible personal property a taxpayer places in service during the year.

Accepted Answer

A) True 
 B)False

Question 11

Jasmine started a new business in the current year. She incurred $16,000 of start-up costs. How much of the start-up costs can be immediately deducted (excluding amounts amortized over 180 months)for the year?

Accepted Answer

A) $0 
B) $2,500 
C) $5,000 
D) $16,000 
E) None of the choices are correct. 
A) $0 
B) $2,500 
C) $5,000 
D) $16,000 
E) None of the choices are correct.

Question 12

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) None of the choices are correct. 
A) Used office machinery 
B) Qualified improvement property 
C) A new delivery truck 
D) Used office furniture 
E) None of the choices are correct.

Question 13

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 14

If the business-use percentage for listed property falls below 50 percent, the only adjustment isthat all future depreciation must be calculated under the straight-line method.

Accepted Answer

A) True 
 B)False

Question 15

During April of the current year, Ronen purchased a warehouse that he used for business purposes. The basis was $1,600,000. Calculate the maximum depreciation deduction during the current year. (Use MACRS Table 5.)

Accepted Answer

$29,104.
The asset's recovery

Question 16

Depreciation is currently computed under the Modified Accelerated Cost Recovery System (MACRS).

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

The MACRS recovery period for automobiles and computers is:

Accepted Answer

A) Three years. 
B) Five years. 
C) Seven years. 
D) 10 years. 
E) None of the choices are correct. 
A) Three years. 
B) Five years. 
C) Seven years. 
D) 10 years. 
E) None of the choices are correct.

Question 19

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 1)(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 20

During April of the current year, Ronen purchased a warehouse that he used for business purposes. The basis was $1,604,000. Calculate the maximum depreciation deduction during the current year. (Use MACRS Table 5.)(Round final answer to the nearest whole number.)

Accepted Answer

${{[a(4)]:#,###}}.
The asset's recovery

Exam 10: Property Acquisition and Cost Recovery

Bonus depreciation is used as a stimulus tool by tax policy makers.

Which of the following business assets is not depreciated?

An asset's capitalized cost basis includes only the actual purchase price, whereas expenses to purchase, prepare the asset for use, and begin using the asset are immediately expensed.

Businesses may immediately expense research and experimentation expenditures, or they may elect to capitalize these costs and amortize them using the straight-line method over a period of not less than 60 months.

Daschle LLC completed some research and development during June of the current year. The related costs were $72,600. 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?

In general, major integrated oil and gas producers may take the greater of cost or percentage depletion.

In general, a taxpayer should select longer-lived property for the §179 immediate expensing election.

Jaussi purchased a computer several years ago for $2,200 and used it for personal purposes. On November 10 th of the current year, when the fair market value of the computer was $800, Jaussi converted it to business use. What is Jaussi's tax basis for the computer?

The §179 immediate expensing election phases out based upon the amount of tangible personal property a taxpayer places in service during the year.

Jasmine started a new business in the current year. She incurred $16,000 of start-up costs. How much of the start-up costs can be immediately deducted (excluding amounts amortized over 180 months)for the year?

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?

If the business-use percentage for listed property falls below 50 percent, the only adjustment isthat all future depreciation must be calculated under the straight-line method.

During April of the current year, Ronen purchased a warehouse that he used for business purposes. The basis was $1,600,000. Calculate the maximum depreciation deduction during the current year. (Use MACRS Table 5.)

Depreciation is currently computed under the Modified Accelerated Cost Recovery System (MACRS).

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

The MACRS recovery period for automobiles and computers is:

During April of the current year, Ronen purchased a warehouse that he used for business purposes. The basis was $1,604,000. Calculate the maximum depreciation deduction during the current year. (Use MACRS Table 5.)(Round final answer to the nearest whole number.)

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 Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Us Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters

Jaussi purchased a computer several years ago for $2,200 and used it for personal purposes. On November 10 ^th of the current year, when the fair market value of the computer was $800, Jaussi converted it to business use. What is Jaussi's tax basis for the computer?