Question 1

The basis of cost recovery property must be reduced by the cost recovery allowed.

Accepted Answer

A) True 
 B)False

Question 2

The maximum cost recovery method for all personal property under MACRS is 150% declining balance.

Accepted Answer

A) True 
 B)False

Question 3

Discuss the reason for the inclusion amount with respect to leased automobiles.

Accepted Answer

The purpose of the inclusion a

Question 4

Orange Corporation begins business on April 2,2012.The corporation has startup expenditures of $54,000.If Orange Corporation elects § 195,determine the total amount that Orange may deduct in 2012.

Accepted Answer

A)  $1,000. 
B)  $2,650. 
C)  $3,650. 
D)  $5,000. 
E)  None of the above. 
A)  $1,000. 
B)  $2,650. 
C)  $3,650. 
D)  $5,000. 
E)  None of the above.

Question 5

In 2011,Gail had a § 179 deduction carryover of $25,000.In 2012,she elected § 179 for an asset acquired at a cost of $115,000.Gail's § 179 business income limitation for 2012 is $142,000.Determine Gail's § 179 deduction for 2012.

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 6

On June 1,2012,Red Corporation purchased an existing business.With respect to the acquired assets of the business,Red allocated $300,000 of the purchase price to a patent.The patent will expire in 20 years.Determine the total amount that Red may amortize for 2012 for the patent.

Accepted Answer

A)  $0. 
B)  $1,667. 
C)  $11,667. 
D)  $35,000. 
E)  None of the above. 
A)  $0. 
B)  $1,667. 
C)  $11,667. 
D)  $35,000. 
E)  None of the above.

Question 7

The § 179 deduction can exceed $139,000 in 2012 if the taxpayer had a § 179 amount which exceeded the taxable income limitation in the prior year.

Accepted Answer

A) True 
 B)False

Question 8

On March 3,2012,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 2012.

Accepted Answer

The gross rents from the apart

Question 9

Rick purchased a uranium interest for $10,000,000 on January 3,2012,when recoverable reserves were estimated at 200,000 units.A total of 10,000 units were extracted in 2012 and 7,000 units were sold in 2012.Gross income from the property was $2,800,000 and taxable income without the allowance for depletion was $1,000,000.Determine the depletion deduction for 2012.

Accepted Answer

Cost depletion
Percentage depl

Question 10

Discuss the tax consequences of listed property being used for the production of income compared to being used in a trade or business.

Accepted Answer

Section 179 expensing cannot b

Question 11

Property used for the production of income is not eligible for § 179 expensing.

Accepted Answer

A) True 
 B)False

Question 12

An election to use straight-line under ADS is made on an asset-by-asset basis for property other than eligible real estate.

Accepted Answer

A) True 
 B)False

Question 13

On July 17,2012,Kevin places in service a used automobile that cost $25,000.The car is used 80% for business and 20% for personal use.In 2013,he used the automobile 40% for business and 60% for personal use.Determine the cost recovery recapture for 2013.

Accepted Answer

A)  $0. 
B)  $448. 
C)  $2,000. 
D)  $2,500. 
E)  None of the above. 
A)  $0. 
B)  $448. 
C)  $2,000. 
D)  $2,500. 
E)  None of the above.

Question 14

The cost of a covenant not to complete for 20 years incurred in connection with the acquisition of a business is amortized over 20 years.

Accepted Answer

A) True 
 B)False

Question 15

If an automobile is placed in service in 2012,the limitation for cost recovery in 2014 will be based on the cost recovery limits for the year 2012.

Accepted Answer

A) True 
 B)False

Question 16

Howard's business is raising and harvesting peaches.On March 10,2012,Howard purchased 10,000 new peach trees at a cost of $60,000.Howard does not elect to expense assets under § 179.If eligible,Howard takes additional first-year depreciation.Determine the cost recovery deduction for 2012.

Accepted Answer

A)  $0. 
B)  $3,000. 
C)  $31,500. 
D)  $60,000. 
E)  None of the above. 
A)  $0. 
B)  $3,000. 
C)  $31,500. 
D)  $60,000. 
E)  None of the above.

The basis of cost recovery property must be reduced by the cost recovery allowed.

The maximum cost recovery method for all personal property under MACRS is 150% declining balance.

Discuss the reason for the inclusion amount with respect to leased automobiles.

Orange Corporation begins business on April 2,2012.The corporation has startup expenditures of $54,000.If Orange Corporation elects § 195,determine the total amount that Orange may deduct in 2012.

In 2011,Gail had a § 179 deduction carryover of $25,000.In 2012,she elected § 179 for an asset acquired at a cost of $115,000.Gail's § 179 business income limitation for 2012 is $142,000.Determine Gail's § 179 deduction for 2012.

On June 1,2012,Red Corporation purchased an existing business.With respect to the acquired assets of the business,Red allocated $300,000 of the purchase price to a patent.The patent will expire in 20 years.Determine the total amount that Red may amortize for 2012 for the patent.

The § 179 deduction can exceed $139,000 in 2012 if the taxpayer had a § 179 amount which exceeded the taxable income limitation in the prior year.

Discuss the tax consequences of listed property being used for the production of income compared to being used in a trade or business.

Property used for the production of income is not eligible for § 179 expensing.

An election to use straight-line under ADS is made on an asset-by-asset basis for property other than eligible real estate.

On July 17,2012,Kevin places in service a used automobile that cost $25,000.The car is used 80% for business and 20% for personal use.In 2013,he used the automobile 40% for business and 60% for personal use.Determine the cost recovery recapture for 2013.

The cost of a covenant not to complete for 20 years incurred in connection with the acquisition of a business is amortized over 20 years.

If an automobile is placed in service in 2012,the limitation for cost recovery in 2014 will be based on the cost recovery limits for the year 2012.

Howard's business is raising and harvesting peaches.On March 10,2012,Howard purchased 10,000 new peach trees at a cost of $60,000.Howard does not elect to expense assets under § 179.If eligible,Howard takes additional first-year depreciation.Determine the cost recovery deduction for 2012.

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: Section 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

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

The basis of cost recovery property must be reduced by the cost recovery allowed.

The maximum cost recovery method for all personal property under MACRS is 150% declining balance.

Discuss the reason for the inclusion amount with respect to leased automobiles.

Orange Corporation begins business on April 2,2012.The corporation has startup expenditures of $54,000.If Orange Corporation elects § 195,determine the total amount that Orange may deduct in 2012.

In 2011,Gail had a § 179 deduction carryover of $25,000.In 2012,she elected § 179 for an asset acquired at a cost of $115,000.Gail's § 179 business income limitation for 2012 is $142,000.Determine Gail's § 179 deduction for 2012.

On June 1,2012,Red Corporation purchased an existing business.With respect to the acquired assets of the business,Red allocated $300,000 of the purchase price to a patent.The patent will expire in 20 years.Determine the total amount that Red may amortize for 2012 for the patent.

The § 179 deduction can exceed $139,000 in 2012 if the taxpayer had a § 179 amount which exceeded the taxable income limitation in the prior year.

Discuss the tax consequences of listed property being used for the production of income compared to being used in a trade or business.

Property used for the production of income is not eligible for § 179 expensing.

An election to use straight-line under ADS is made on an asset-by-asset basis for property other than eligible real estate.

On July 17,2012,Kevin places in service a used automobile that cost $25,000.The car is used 80% for business and 20% for personal use.In 2013,he used the automobile 40% for business and 60% for personal use.Determine the cost recovery recapture for 2013.

The cost of a covenant not to complete for 20 years incurred in connection with the acquisition of a business is amortized over 20 years.

If an automobile is placed in service in 2012,the limitation for cost recovery in 2014 will be based on the cost recovery limits for the year 2012.

Howard's business is raising and harvesting peaches.On March 10,2012,Howard purchased 10,000 new peach trees at a cost of $60,000.Howard does not elect to expense assets under § 179.If eligible,Howard takes additional first-year depreciation.Determine the cost recovery deduction for 2012.

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: Section 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters