Exam 7: Accounting Periods and Methods and Depreciation

A taxpayer places a $550,000 5-year recovery period asset in service in 2016. This is the only asset placed in service in 2016. Assuming half-year convention, an election to expense under Section 179, and no income limitation, what is the amount of total cost recovery deduction (no bonus depreciation)?​

Goodwill is considered to be a Section 197 asset amortized over 15 years for tax purposes.

Joyce purchased a passenger automobile on March 2, 2016. She paid $12,000 for the automobile and can support business use of 85 percent. Calculate the amount of depreciation on the automobile for 2016 using the accelerated MACRS method (if available), assuming Joyce does not make the election to expense or claim bonus depreciation.

On January 1, 2016, Roxburgia Company places a commercial storage building in service. The costs allocated to construction of the building total $300,000 and land is accounted for separately. Which of the following is a true statement with respect to the depreciation of the building?

If actual business use of an automobile is less than 100 percent, the annual automobile depreciation limitations must be reduced to reflect the actual business use only.

If listed property is used more than 50 percent in a qualified business use, depreciation must be calculated using the straight-line method.

Choose the incorrect statement.

"Annualizing" is a method by which the taxpayer can usually decrease the amount of tax he or she pays.

For each of the following independent situations, indicate with a "Yes" if the asset is listed property. Indicate with a "No" if the asset is not listed property. a.Airplane used 25 percent for business ______ b.Fleet of cabs ______ c.A moving van ______ d.DVD player used 10 percent for business ______ e.A digital camera used 30 percent of the time to list eBay items ______

Routine maintenance costs for capital assets are deducted in the year the amount is paid or incurred, not capitalized as an improvement to the asset.

Choose the correct answer. In calculating depreciation: