Exam 8: Depreciation, cost Recovery, amortization, and Depletion

On May 2,2012,Karen placed in service a new sports utility vehicle that cost $60,000 and has a gross vehicle weight of 6,300 lbs.The vehicle is used 60% for business and 40% for personal use.Determine the cost recovery for 2012.Karen wants to maximize her deductions.

Once the more-than-50% business usage test is passed for listed property,it does matter if the business usage for the property drops to 50% or less during the recovery period.

If startup expenses total $53,000 in 2012,$51,000 is amortized over 180 months.

All personal property placed in service in 2012 and used in a trade or business qualifies for additional first-year depreciation.

On July 15,2012,Mavis paid $275,000 for exterior leasehold improvements on a commercial building she was leasing.Determine the total cost recovery from the improvements in 2012.Mavis elected not to take additional first-year depreciation.

The inclusion amount for a leased automobile is adjusted by a business usage percentage.

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

On February 21,2012,Joe purchased new farm equipment for $600,000.Joe has made an election to not have the uniform capitalization rules apply to his farming business.He does not take additional first-year depreciation.If Joe elects § 179,what is the maximum write-off for this purchase for 2013?

Under MACRS,if the mid-quarter convention is applicable,all property sold is treated as being sold at the mid-point of the quarter in which it is placed in service.

The § 179 limit for a sports utility vehicle with a GVW of 7,000 pounds used for the production of income is $25,000.

On July 10,2012,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 2012,assuming Ariff's § 179 business income is $110,000.Ariff does not take additional first-year depreciation.

On August 20,2012,May signed a 10-year lease on a building for her business.On November 28,2013,May paid $80,000 for a qualified leasehold improvement to the building.She takes additional first-year depreciation.What is May's cost recovery deduction for the improvement in 2013?

In a farming business,if the uniform capitalization rules are not used,cost is recovered using the ADS straight-line method.

During the past two years,through extensive advertising and improved customer relations,Orange Corporation estimated that it had developed customer goodwill worth $500,000.For the current year,determine the amount of goodwill Orange Corporation may amortize.

Mary purchased a new five-year class asset on March 7,2012.The asset was listed property (not an automobile).It was used 60% for business and the rest of the time for personal use.The asset cost $600,000.Mary made the § 179 election.The income from the business before the § 179 deduction was $400,000.Mary does take additional first-year depreciation.Determine the total deductions with respect to the asset for 2012.

Polly purchased a new hotel on July 20,2012,for $6,000,000.On January 20,2019,the building was sold.Determine the cost recovery deduction for the year of the sale.

The statutory dollar cost recovery limits under § 280F do not apply to all automobiles.

The statutory dollar cost recovery limits under § 280F for passenger automobiles still apply if mid-quarter cost recovery is used.

A taxpayer may elect to use the alternative depreciation system (ADS)on property used predominantly outside the United States.

Nora purchased a new automobile on July 20,2012,for $29,000.The car was used 60% for business and 40% for personal use.In 2013,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 2013.