Question 1

Discuss the beneficial tax consequences of an SUV not being classified as a passenger automobile.

Accepted Answer

If an automobile is not classified as a passenger automobile, it is not subject to the statutory dollar cost recovery limits under § 280F. In addition to a larger cost recovery deduction each year, it also results in the total recovery of the cost over a six-year period. While the automobile is still listed property, if it passes the more-than-50% business use test, MACRS cost recovery can be used as well as an election under § 179. However, the § 179 limit for SUVs is $25,000 rather than $510,000 in 2017 ($500,000 in 2016). The automobile also is eligible for additional first-year depreciation.

Question 2

The luxury auto cost recovery limits applies to all automobiles.

Accepted Answer

A) True 
 B)False  False

Question 3

On May 30, 2016, Jane purchased a factory building to use for her business. In August 2017, Jane paid $300,000 for improvements to the building. Determine Jane's total deduction with respect to the building improvements for 2017.

Accepted Answer

A) $2,889 
B) $4,173 
C) $4,815 
D) $25,000 
E) None of the above 
A) $2,889 
B) $4,173 
C) $4,815 
D) $25,000 
E) None of the above A

Question 4

For real property, the ADS convention is the mid-month convention.

Accepted Answer

A) True 
 B)False

Question 5

Under the MACRS straight-line election for personalty, only the half-year convention is applicable.

Accepted Answer

A) True 
 B)False

Question 6

Norm purchases a new sports utility vehicle (SUV) on October 12, 2017, for $60,000. The SUV has a gross vehicle weight of 6,200 lbs. It is used 100% of the time for business and it is the only business asset acquired by Norm during 2017. Compute the maximum deduction with respect to the SUV for 2017. Norm does not take additional first-year depreciation.

Accepted Answer

The SUV is not classified as a

Question 7

Discuss the difference between the half-year convention and the mid-quarter convention.

Accepted Answer

The half-year convention assumes propert

Question 8

Augie purchased one new asset during the year (five-year property) on November 10, 2017, at a cost of $660,000. She would like to use the § 179 election and will also take additional first-year depreciation. The income from the business before the cost recovery deduction and the § 179 deduction was $600,000. Determine the total cost recovery deduction with respect to the asset for 2017.

Accepted Answer

A) $30,500 
B) $320,250 
C) $510,000 
D) $588,750 
E) None of the above 
A) $30,500 
B) $320,250 
C) $510,000 
D) $588,750 
E) None of the above

Question 9

Nora purchased a new automobile on July 20, 2016, for $29,000. The car was used 60% for business and 40% for personal use. In 2017, the car was used 30% for business and 70% for personal use. Nora elects not to take additional first-year depreciation. Determine the cost recovery recapture and the cost recovery deduction for 2017.

Accepted Answer

Cost recovery in 201

Question 10

On July 10, 2017, Ariff places in service a new sports utility vehicle that cost $70,000 and weighed 6,300 pounds. The SUV is used 100% for business. Determine Ariff's maximum deduction for 2017, assuming Ariff's § 179 business income is $110,000. Ariff does not take additional first-year depreciation.

Accepted Answer

A) $2,960 
B) $25,000 
C) $34,000 
D) $70,000 
E) None of the above 
A) $2,960 
B) $25,000 
C) $34,000 
D) $70,000 
E) None of the above

Question 11

Alice purchased office furniture on September 20, 2016, for $100,000. On October 10, 2016, she purchased business computers for $80,000. Alice placed all of the assets in service on January 15, 2017. Alice did not elect to expense any of the assets under § 179, did not elect straight-line cost recovery, and did not take additional first-year depreciation. Determine the cost recovery deduction for the business assets for 2017. ​

Accepted Answer

A) $6,426 
B) $14,710 
C) $25,722 
D) $30,290 
E) None of the above 
A) $6,426 
B) $14,710 
C) $25,722 
D) $30,290 
E) None of the above

Question 12

Hans purchased a new passenger automobile on August 17, 2017, for $30,000. During the year the car was used 40% for business and 60% for personal use. Determine his cost recovery deduction for the car for 2017.

Accepted Answer

A) $500 
B) $1,000 
C) $1,224 
D) $1,500 
E) None of the above 
A) $500 
B) $1,000 
C) $1,224 
D) $1,500 
E) None of the above

Question 13

Under the alternative depreciation system (ADS), the half-year convention must be used for personalty.

Accepted Answer

A) True 
 B)False

Question 14

MACRS depreciation is used to compute earnings and profits.

Accepted Answer

A) True 
 B)False

Question 15

Doug purchased a new factory building on January 15, 1990, for $400,000. On March 1, 2017, the building was sold. Determine the cost recovery deduction for the year of the sale; Doug did not use the MACRS straight-line method.

Accepted Answer

A) $0 
B) $1,587 
C) $2,645 
D) $12,696 
E) None of the above 
A) $0 
B) $1,587 
C) $2,645 
D) $12,696 
E) None of the above

Question 16

In 2016, Gail had a § 179 deduction carryover of $30,000. In 2017, she elected § 179 for an asset acquired at a cost of $115,000. Gail's § 179 business income limitation for 2017 is $140,000. Determine Gail's § 179 deduction for 2017.

Accepted Answer

A) $25,000 
B) $115,000 
C) $130,000 
D) $140,000 
E) None of the above 
A) $25,000 
B) $115,000 
C) $130,000 
D) $140,000 
E) None of the above

Question 17

A used $35,000 automobile that is used 100% for business is placed in service in 2017. If the automobile fails the 50% business usage test in the second year, no cost recovery will be recaptured.

Accepted Answer

A) True 
 B)False

Question 18

On April 5, 2017, Orange Corporation purchased, and placed in service, seven-year class assets costing $540,000 and five-year class assets costing $140,000. Orange elects to expense the maximum amount under § 179. Orange does not take additional first-year depreciation. Assume taxable income is not a limitation. Determine Orange Corporation's cost recovery with respect to the assets for 2017.

Accepted Answer

The answer of On April 5, 2017, Orange Corporation purchased,...

Question 19

Sid bought a new $1,310,000 seven-year class asset on August 2, 2017. On December 2, 2017, he purchased $800,000 of used five-year class assets. If Sid elects § 179 and takes additional first-year depreciation, what is the maximum cost recovery deduction for these purchases for 2017?

Accepted Answer

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Question 20

Taxpayers may elect to use the straight-line method under MACRS for personalty.

Accepted Answer

A) True 
 B)False

Discuss the beneficial tax consequences of an SUV not being classified as a passenger automobile.

The luxury auto cost recovery limits applies to all automobiles.

On May 30, 2016, Jane purchased a factory building to use for her business. In August 2017, Jane paid $300,000 for improvements to the building. Determine Jane's total deduction with respect to the building improvements for 2017.

For real property, the ADS convention is the mid-month convention.

Under the MACRS straight-line election for personalty, only the half-year convention is applicable.

Discuss the difference between the half-year convention and the mid-quarter convention.

Hans purchased a new passenger automobile on August 17, 2017, for $30,000. During the year the car was used 40% for business and 60% for personal use. Determine his cost recovery deduction for the car for 2017.

Under the alternative depreciation system (ADS), the half-year convention must be used for personalty.

MACRS depreciation is used to compute earnings and profits.

Doug purchased a new factory building on January 15, 1990, for $400,000. On March 1, 2017, the building was sold. Determine the cost recovery deduction for the year of the sale; Doug did not use the MACRS straight-line method.

In 2016, Gail had a § 179 deduction carryover of $30,000. In 2017, she elected § 179 for an asset acquired at a cost of $115,000. Gail's § 179 business income limitation for 2017 is $140,000. Determine Gail's § 179 deduction for 2017.

A used $35,000 automobile that is used 100% for business is placed in service in 2017. If the automobile fails the 50% business usage test in the second year, no cost recovery will be recaptured.

Sid bought a new $1,310,000 seven-year class asset on August 2, 2017. On December 2, 2017, he purchased $800,000 of used five-year class assets. If Sid elects § 179 and takes additional first-year depreciation, what is the maximum cost recovery deduction for these purchases for 2017?

Taxpayers may elect to use the straight-line method under MACRS for personalty.

An Introduction to Taxation and Understanding Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination; an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

Exam 8: Depreciation, Cost Recovery, Amortization, and Depletion

Discuss the beneficial tax consequences of an SUV not being classified as a passenger automobile.

The luxury auto cost recovery limits applies to all automobiles.

On May 30, 2016, Jane purchased a factory building to use for her business. In August 2017, Jane paid $300,000 for improvements to the building. Determine Jane's total deduction with respect to the building improvements for 2017.

For real property, the ADS convention is the mid-month convention.

Under the MACRS straight-line election for personalty, only the half-year convention is applicable.

Discuss the difference between the half-year convention and the mid-quarter convention.

Hans purchased a new passenger automobile on August 17, 2017, for $30,000. During the year the car was used 40% for business and 60% for personal use. Determine his cost recovery deduction for the car for 2017.

Under the alternative depreciation system (ADS), the half-year convention must be used for personalty.

MACRS depreciation is used to compute earnings and profits.

Doug purchased a new factory building on January 15, 1990, for $400,000. On March 1, 2017, the building was sold. Determine the cost recovery deduction for the year of the sale; Doug did not use the MACRS straight-line method.

In 2016, Gail had a § 179 deduction carryover of $30,000. In 2017, she elected § 179 for an asset acquired at a cost of $115,000. Gail's § 179 business income limitation for 2017 is $140,000. Determine Gail's § 179 deduction for 2017.

A used $35,000 automobile that is used 100% for business is placed in service in 2017. If the automobile fails the 50% business usage test in the second year, no cost recovery will be recaptured.

Sid bought a new $1,310,000 seven-year class asset on August 2, 2017. On December 2, 2017, he purchased $800,000 of used five-year class assets. If Sid elects § 179 and takes additional first-year depreciation, what is the maximum cost recovery deduction for these purchases for 2017?

Taxpayers may elect to use the straight-line method under MACRS for personalty.

An Introduction to Taxation and Understanding Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination; an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters