Exam 10: Cost Recovery on Property: Depreciation, Depletion, and Amortization

Which of the following would not be allowed a depreciation deduction? I.Inventory. II.Business equipment. III.Land acquired as an investment. IV.Cattle used in a dairy herd. ​

Which of the following would not be considered to be Listed Property for depreciation purposes?

Qualified Section 179 property for a retail store includes I.Store shelving. II.Company auto used by salesmen. III.Sidewalks in front of the store. IV.Delivery van owned by the store. ​

Mike purchases 5-year class listed property for $3,000 during the current year. He uses the computer 40% of the time in his consulting business. Mike would like to maximize his cost recovery deduction. What is his allowable cost recovery deduction on the computer?

On August 3, 2018, Yang purchases office furniture (7-year property) costing $21,000 for use in her business. She does not wish to use the Section 179 election, elects not to use bonus depreciation and makes the election to use the straight-line method over the MACRS recovery period. What is Yang's 2018 cost recovery deduction?

Which of the following correctly describe(s) cost recovery of automobiles placed in service in 2018?

Daniel purchases 5-year class listed property on March 2, 2018, for $30,000. It is used 75% for business, and the remainder for personal use. Daniel wishes to maximize his 2018 depreciation deduction. What is Daniel 's 2018 depreciation deduction?

A limitation exists on the annual amount of deductible depreciation for passenger automobiles. The limitation rules include which of the following? I.If the automobile is used less than 100% for business, the annual limitation amount is reduced by multiplying it by the business-use percentage. II.Section 179 expensing is available for passenger automobiles, but often is not advantageous. ​

Under the computation of the alternative minimum tax, the Alternative Depreciation System may be used but is not required.

Wellington Apartments purchases an apartment building on November 9, 2018, for $1,000,000 (exclusive of the cost allocated to the land). What is the 2018 MACRS depreciation deduction?

Weston purchases equipment classified as 7-year property on January 5, 2017, at a cost of $80,000. Section 179 was not elected. He sells the equipment on February 12, 2018. What is Weston's 2017 depreciation deduction?

In 2018, Oscar purchases $2,150,000 of equipment. The taxable income of the business before any Section 179 deduction is $20,000. What is Oscar's maximum Section 179 deduction in 2018?

Tucker Estates places an apartment building in service on November 22, 2014. The building's depreciable basis is $3,300,000. Tucker Estates sells the building on March 5, 2018. What is Tucker Estates' 2018 depreciation deduction on the property?

Wu Copy Shop purchases a new copy machine in July 2018 for $30,000. No other depreciable assets are placed in service in 2018. Since Wu Copy Shop expects to be in a much higher tax bracket in future years, it desires to minimize its current cost recovery amount to the fullest extent possible. What is the amount of Wu Copy Shop's ADS depreciation for 2018?

Ralph buys a new truck (5-year MACRS property) to use in his landscaping business on May 13, 2018, at a cost of $18,000. On November 5, 2018, Ralph takes advantage of an end of the season clearance sale to purchase various landscaping equipment (7-year MACRS property) costing $34,000. Assuming that Ralph does not wish to immediately expense any of the cost of the property purchased this year and elects not to take bonus depreciation, what is his 2018 maximum allowable cost recovery deduction?

Rand Company purchases and places into service a company automobile costing $40,000 in April 2018. What is the 2018 depreciation deduction on the auto?

During 2018, Williams Company purchases and places in service office equipment with a cost of $40,000. The equipment is 7-year MACRS property. What is its 2018 depreciation deduction for purposes of the alternative minimum tax?

Match each statement with the correct term below. -MACRS

Charles purchases an interest in a uranium mine for $2,500,000 on June 7, 2018. Recoverable tonnage is estimated at 500,000. During 2018, 25,000 tons are mined and sold for $800,000. Charles incurs $500,000 of expenses during 2018. The percentage depletion rate for uranium is 22%. What is the depletion deduction for 2018?

In May 2018, Preston purchases 5-year MACRS property costing $150,000 and 7-year MACRS property costing $60,000. Preston's income is $100,000. Preston does not want to claim bonus depreciation. If Preston wishes to maximize his total 2018 cost recovery deduction, what will his total cost recovery deduction be on the properties purchased in 2018?