Question 1

How is the recovery period of an asset determined?

Accepted Answer

A) Estimated useful life 
B) Treasury regulation 
C) Revenue Procedure 87-56 
D) Revenue Ruling 97-56 
E) None of the choices are correct. 
A) Estimated useful life 
B) Treasury regulation 
C) Revenue Procedure 87-56 
D) Revenue Ruling 97-56 
E) None of the choices are correct.

Question 2

Which of the following is not usually included in an asset's tax basis?

Accepted Answer

A) Purchase price 
B) Sales tax 
C) Shipping 
D) Installation costs 
E) All of the choices are included in an asset's tax basis. 
A) Purchase price 
B) Sales tax 
C) Shipping 
D) Installation costs 
E) All of the choices are included in an asset's tax basis.

Question 3

Lax LLC purchased only one asset during the current year (a full 12-month tax year).On August 26 Lax placed in service computer equipment (five-year property)with a basis of $20,000. Calculate the maximum depreciation expense for the current year (ignoring §179 and bonus depreciation). (Use MACRS Table 1.)

Accepted Answer

A) $2,000 
B) $2,858 
C) $3,000 
D) $4,000 
E) None of the choices are correct. 
A) $2,000 
B) $2,858 
C) $3,000 
D) $4,000 
E) None of the choices are correct.

Question 4

An office building was purchased several years agoon 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 10th year, the building was sold on March 10th. Calculate the maximum depreciation deduction for the real property during the current year, rounded to the nearest whole number. (Use MACRS Table 5.)

Accepted Answer

$10,149.
The asset's recovery period is

Question 5

Beth's business purchased only one asset during the current year (a full 12-month tax year). On December 1 Beth placed in service machinery (seven-year property)with a basis of $50,000. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation). (Use MACRS Table 2.)

Accepted Answer

A) $1,785 
B) $2,500 
C) $7,145 
D) $10,000 
E) None of the choices are correct. 
A) $1,785 
B) $2,500 
C) $7,145 
D) $10,000 
E) None of the choices are correct.

Question 6

Crouch LLC placed in service on May 19, 2020, machinery and equipment (seven-year property)with a basis of $3,200,000. Assume that Crouch has sufficient income to avoid any limitations. Calculate the maximum depreciation deduction including §179 expensing (but ignoring bonus depreciation). (Use MACRS Table 1.)

Accepted Answer

A) $457,280 
B) $430,000 
C) $825,833 
D) $1,040,000 
E) None of the choices are correct. 
A) $457,280 
B) $430,000 
C) $825,833 
D) $1,040,000 
E) None of the choices are correct.

Question 7

Business assets that tend to be used for both business and personal purposes are referred to as listed property.

Accepted Answer

A) True 
 B)False

Question 8

All assets subject to amortization have the same recovery period.

Accepted Answer

A) True 
 B)False

Question 9

Bonnie Jo purchased a used camera (five-year property)for use in her sole proprietorship. The basis of the camera was $3,600. Bonnie Jo used the camera in her business 70 percent of the time and used it for personal purposes the rest of the time during the first year. Calculate Bonnie Jo's depreciation deduction during the first year, assuming the sole proprietorship had a loss during the year. (Bonnie did not place the property in service in the last quarter.)(Use MACRS Table 1.)

Accepted Answer

A) $360 
B) $504 
C) $720 
D) $3,600 
E) None of the choices are correct. 
A) $360 
B) $504 
C) $720 
D) $3,600 
E) None of the choices are correct.

Question 10

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.)

Accepted Answer

$6,073.
The asset's recovery p

Question 11

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 12

Tax depreciation is currently calculated under what system?

Accepted Answer

A) Sum-of-the-years'-digits 
B) Accelerated cost recovery system 
C) Modified Accelerated Cost Recovery System 
D) Straight-line system 
E) None of the choices are correct. 
A) Sum-of-the-years'-digits 
B) Accelerated cost recovery system 
C) Modified Accelerated Cost Recovery System 
D) Straight-line system 
E) None of the choices are correct.

Question 13

The alternative depreciation system requires both a slower method of recovery and longer recovery periods.

Accepted Answer

A) True 
 B)False

Question 14

Santa Fe purchased the rights to extract turquoise on a tract of land over a five-year period. Santa Fe paid $300,000 for extraction rights. A geologist estimates that Santa Fe will recover 5,000 pounds of turquoise. During the current year, Santa Fe extracted 1,500 pounds of turquoise, which it sold for $200,000. What is Santa Fe's cost depletion deduction for the current year?

Accepted Answer

A) $60,000 
B) $90,000 
C) $110,000 
D) $300,000 
E) None of the choices are correct. 
A) $60,000 
B) $90,000 
C) $110,000 
D) $300,000 
E) None of the choices are correct.

Question 15

To increase their depreciation deduction on automobiles, taxpayers should elect §179 expense.

Accepted Answer

A) True 
 B)False

Question 16

Real property is depreciated using the straight-line method.

Accepted Answer

A) True 
 B)False

Question 17

The MACRS depreciation tables automatically switch to the straight-line method when the straight-line method yields a higher annual depreciation amount than the declining balance method.

Accepted Answer

A) True 
 B)False

Question 18

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 19

BoxerLLC has acquired various types of assets recently used 100 percent in its trade or business. Below is a list of assets acquired during 2019 and 2020:
   Boxer did not elect §179 expense and elected out of bonus depreciation in 2019, but would like to take advantage of the §179 expense and bonus depreciation for 2020 (assume that taxable income is sufficient). Calculate Boxer's maximum depreciation deduction for 2020. (Use MACRS Table 1, MACRS Table 5, and Exhibit 10-10.)(Round final answer to the nearest whole number.)

Accepted Answer

$249,727.
§179 allows expensing of all t

Question 20

Bonnie Jo purchased a used camera (five-year property)for use in her sole proprietorship. The basis of the camera was $2,400. Bonnie Jo used the camera in her business 60 percent of the time and used it for personal purposes the rest of the time during the first year. Calculate Bonnie Jo's depreciation deduction during the first year, assuming the sole proprietorship had a loss during the year. (Bonnie did not place the property in service in the last quarter.)(Use MACRS Table 1.)

Accepted Answer

A) $240 
B) $288 
C) $480 
D) $2,400 
E) None of the choices are correct. 
A) $240 
B) $288 
C) $480 
D) $2,400 
E) None of the choices are correct.

How is the recovery period of an asset determined?

Which of the following is not usually included in an asset's tax basis?

Beth's business purchased only one asset during the current year (a full 12-month tax year). On December 1 Beth placed in service machinery (seven-year property)with a basis of $50,000. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation). (Use MACRS Table 2.)

Business assets that tend to be used for both business and personal purposes are referred to as listed property.

All assets subject to amortization have the same recovery period.

An office desk is an example of:

Tax depreciation is currently calculated under what system?

The alternative depreciation system requires both a slower method of recovery and longer recovery periods.

To increase their depreciation deduction on automobiles, taxpayers should elect §179 expense.

Real property is depreciated using the straight-line method.

The MACRS depreciation tables automatically switch to the straight-line method when the straight-line method yields a higher annual depreciation amount than the declining balance method.

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

Exam 10: Property Acquisition and Cost Recovery

How is the recovery period of an asset determined?

Which of the following is not usually included in an asset's tax basis?

Beth's business purchased only one asset during the current year (a full 12-month tax year). On December 1 Beth placed in service machinery (seven-year property)with a basis of $50,000. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation). (Use MACRS Table 2.)

Business assets that tend to be used for both business and personal purposes are referred to as listed property.

All assets subject to amortization have the same recovery period.

An office desk is an example of:

Tax depreciation is currently calculated under what system?

The alternative depreciation system requires both a slower method of recovery and longer recovery periods.

To increase their depreciation deduction on automobiles, taxpayers should elect §179 expense.

Real property is depreciated using the straight-line method.

The MACRS depreciation tables automatically switch to the straight-line method when the straight-line method yields a higher annual depreciation amount than the declining balance method.

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