Question 1

In a farming business,MACRS straight-line cost recovery is required for all fruit bearing trees.

Accepted Answer

A) True 
 B)False  True

Question 2

In 2013,Gail had a § 179 deduction carryover of $30,000.In 2014,she elected § 179 for an asset acquired at a cost of $115,000.Gail's § 179 business income limitation for 2014 is $140,000.Determine Gail's § 179 deduction for 2014.

Accepted Answer

A) $25,000 
B) $35,000 
C) $40,000 
D) $55,000 
E) None of these 
A) $25,000 
B) $35,000 
C) $40,000 
D) $55,000 
E) None of these A

Question 3

In 2013,the costs of qualified leasehold improvements qualify for additional first-year depreciation.

Accepted Answer

A) True 
 B)False  True

Question 4

Intangible drilling costs must be capitalized and written off through depletion.

Accepted Answer

A) True 
 B)False

Question 5

George purchases used seven­year class property at a cost of $200,000 on April 20,2014.Determine George's cost recovery deduction for 2014 for alternative minimum tax purposes,assuming George does not elect § 179.

Accepted Answer

A) $2,500 
B) $10,000 
C) $14,280 
D) $28,580 
E) None of these 
A) $2,500 
B) $10,000 
C) $14,280 
D) $28,580 
E) None of these

Question 6

James purchased a new business asset (three-year personalty)on July 23,2013,at a cost of $40,000.James takes additional first-year depreciation Determine the cost recovery deduction for 2013.

Accepted Answer

A) $8,333 
B) $26,666 
C) $33,333 
D) $41,665 
E) None of these 
A) $8,333 
B) $26,666 
C) $33,333 
D) $41,665 
E) None of these

Question 7

On April 15,2014,Sam placed in service a storage facility (a single-purpose agricultural structure)costing $80,000.Sam also purchased and planted fruit trees costing $40,000.Sam does not elect to expense any of the acquisitions under § 179 and he elects not to take additional first­year depreciation (if available).Determine Sam's cost recovery from these two items for 2014.

Accepted Answer

Storage facility ($80,000 × .0

Question 8

Discuss the requirements in order for startup expenditures to be amortized under § 195.

Accepted Answer

The expenditures must meet two requireme

Question 9

Nora purchased a new automobile on July 20,2013,for $29,000.The car was used 60% for business and 40% for personal use.In 2014,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 2014.

Accepted Answer

Cost recovery in 2013:
MACRS ($29,000 ×

Question 10

Tara purchased a machine for $40,000 to be used in her business.The cost recovery allowed and allowable for the three years the machine was used are as follows:   If Tara sells the machine after three years for $15,000,how much gain should she recognize?

Accepted Answer

A) $3,480 
B) $6,360 
C) $9,240 
D) $11,480 
E) None of these 
A) $3,480 
B) $6,360 
C) $9,240 
D) $11,480 
E) None of these

Question 11

The amortization period in 2014 for $58,000 of startup expenses is 180 months.

Accepted Answer

A) True 
 B)False

Question 12

Any § 179 expense amount that is carried forward is subject to the business income limitation in the carryforward year.

Accepted Answer

A) True 
 B)False

Question 13

The statutory dollar cost recovery limits under § 280F does apply to all automobiles.

Accepted Answer

A) True 
 B)False

Question 14

Percentage depletion enables the taxpayer to recover more than the cost of an asset.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

The half-year convention assumes propert

Question 16

Joe purchased a new five-year class asset on June 1,2014.The asset is listed property (not an automobile).It was used 55% for business and 45% for the production of income.The asset cost $100,000.Joe made the § 179 election.Joe's taxable income would not create a limitation for purposes of the § 179 deduction.Joe does not take additional first­year depreciation (if available).Determine Joe's total cost recovery (including the § 179 deduction)for the year.

Accepted Answer

Business use: $55,000 ($100,00

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

On March 1,2014,Lana leases and places in service a passenger automobile.The lease will run for five years and the payments are $500 per month.During 2014,she uses her car 60% for business and 40% for personal activities.Assuming the dollar amount from the IRS table is $20,determine Lana's inclusion as a result of the lease.

Accepted Answer

A) $0 
B) $10 
C) $17 
D) $20 
E) None of these 
A) $0 
B) $10 
C) $17 
D) $20 
E) None of these

Question 19

On March 3,2014,Sally purchased and placed in service a building costing $12,000,000.The building has 10 floors.The bottom three floors are rented out to businesses.The top seven floors are residential apartments.The gross rents from the businesses are $60,000 and the gross rents from the apartments are $110,000.Determine Sally's cost recovery for the building in 2014.

Accepted Answer

The gross rents from the apart

Question 20

If a new car that is used predominantly in business is placed in service in 2014,the statutory dollar cost recovery limit under § 280F will depend on whether the taxpayer takes MACRS or straight­line depreciation.

Accepted Answer

A) True 
 B)False

In a farming business,MACRS straight-line cost recovery is required for all fruit bearing trees.

In 2013,Gail had a § 179 deduction carryover of $30,000.In 2014,she elected § 179 for an asset acquired at a cost of $115,000.Gail's § 179 business income limitation for 2014 is $140,000.Determine Gail's § 179 deduction for 2014.

In 2013,the costs of qualified leasehold improvements qualify for additional first-year depreciation.

Intangible drilling costs must be capitalized and written off through depletion.

George purchases used sevenyear class property at a cost of $200,000 on April 20,2014.Determine George's cost recovery deduction for 2014 for alternative minimum tax purposes,assuming George does not elect § 179.

James purchased a new business asset (three-year personalty)on July 23,2013,at a cost of $40,000.James takes additional first-year depreciation Determine the cost recovery deduction for 2013.

Discuss the requirements in order for startup expenditures to be amortized under § 195.

Tara purchased a machine for $40,000 to be used in her business.The cost recovery allowed and allowable for the three years the machine was used are as follows: If Tara sells the machine after three years for $15,000,how much gain should she recognize?

The amortization period in 2014 for $58,000 of startup expenses is 180 months.

Any § 179 expense amount that is carried forward is subject to the business income limitation in the carryforward year.

The statutory dollar cost recovery limits under § 280F does apply to all automobiles.

Percentage depletion enables the taxpayer to recover more than the cost of an asset.

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

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

If a new car that is used predominantly in business is placed in service in 2014,the statutory dollar cost recovery limit under § 280F will depend on whether the taxpayer takes MACRS or straightline depreciation.

An Introduction to Taxation and Understanding the 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

In a farming business,MACRS straight-line cost recovery is required for all fruit bearing trees.

In 2013,Gail had a § 179 deduction carryover of $30,000.In 2014,she elected § 179 for an asset acquired at a cost of $115,000.Gail's § 179 business income limitation for 2014 is $140,000.Determine Gail's § 179 deduction for 2014.

In 2013,the costs of qualified leasehold improvements qualify for additional first-year depreciation.

Intangible drilling costs must be capitalized and written off through depletion.

George purchases used seven­year class property at a cost of $200,000 on April 20,2014.Determine George's cost recovery deduction for 2014 for alternative minimum tax purposes,assuming George does not elect § 179.

James purchased a new business asset (three-year personalty)on July 23,2013,at a cost of $40,000.James takes additional first-year depreciation Determine the cost recovery deduction for 2013.

Discuss the requirements in order for startup expenditures to be amortized under § 195.

Tara purchased a machine for $40,000 to be used in her business.The cost recovery allowed and allowable for the three years the machine was used are as follows: If Tara sells the machine after three years for $15,000,how much gain should she recognize?

The amortization period in 2014 for $58,000 of startup expenses is 180 months.

Any § 179 expense amount that is carried forward is subject to the business income limitation in the carryforward year.

The statutory dollar cost recovery limits under § 280F does apply to all automobiles.

Percentage depletion enables the taxpayer to recover more than the cost of an asset.

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

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

If a new car that is used predominantly in business is placed in service in 2014,the statutory dollar cost recovery limit under § 280F will depend on whether the taxpayer takes MACRS or straight­line depreciation.

An Introduction to Taxation and Understanding the 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

George purchases used sevenyear class property at a cost of $200,000 on April 20,2014.Determine George's cost recovery deduction for 2014 for alternative minimum tax purposes,assuming George does not elect § 179.

If a new car that is used predominantly in business is placed in service in 2014,the statutory dollar cost recovery limit under § 280F will depend on whether the taxpayer takes MACRS or straightline depreciation.