Question 1

Taxpayers must use the straight-line method of depreciation for all productive assets.

Accepted Answer

A) True 
 B)False

Question 2

Scott purchases a small business from Lew on July 1,2017.He paid the following amounts for the business:
​
   
a.How much of the $458,000 purchase price is for Section 197 intangible assets?
b.What amount can Scott deduct on his 2017 tax return as Section 197 intangible amortization?

Accepted Answer

The answer of Scott purchases a small business from Lew...

Question 3

Automobiles generally have a 3-year cost recovery period under the Modified Accelerated Cost Recovery System (MACRS).

Accepted Answer

A) True 
 B)False

Question 4

If land declines in value,it may be depreciated for tax purposes.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is true about the MACRS depreciation system?

Accepted Answer

A) No salvage value is used before depreciation percentages are applied to depreciable real estate. 
B) Residential rental buildings are depreciated straight-line over 20 years . 
C) Commercial real estate buildings are depreciated over 39 years using accelerated depreciation. 
D) No matter when equipment is purchased during the month,it is considered to have been purchased mid-month for MACRS depreciation purposes. 
A) No salvage value is used before depreciation percentages are applied to depreciable real estate. 
B) Residential rental buildings are depreciated straight-line over 20 years . 
C) Commercial real estate buildings are depreciated over 39 years using accelerated depreciation. 
D) No matter when equipment is purchased during the month,it is considered to have been purchased mid-month for MACRS depreciation purposes.

Question 6

Taxpayers choosing the election to expense:

Accepted Answer

A) May depreciate the amount of the asset cost that exceeds the amount allowed under the election to expense. 
B) Will have the maximum that can be expensed under the election reduced by $0.50 for each dollar by which the cost of the asset acquired exceeds a specified limit. 
C) May not carry over any amounts elected which are not allowed because of taxable income limitations. 
D) May expense a $125,000 automobile so long as it is used 100 percent for business. 
A) May depreciate the amount of the asset cost that exceeds the amount allowed under the election to expense. 
B) Will have the maximum that can be expensed under the election reduced by $0.50 for each dollar by which the cost of the asset acquired exceeds a specified limit. 
C) May not carry over any amounts elected which are not allowed because of taxable income limitations. 
D) May expense a $125,000 automobile so long as it is used 100 percent for business.

Question 7

Section 197 intangibles:

Accepted Answer

A) Are amortized over a 15-year period. 
B) Include goodwill,going-concern value,and information bases. 
C) Were defined in the Revenue Reconciliation Act of 1993. 
D) Are not amortized over the actual estimated useful life of the intangible asset. 
E) All of the above are true. 
A) Are amortized over a 15-year period. 
B) Include goodwill,going-concern value,and information bases. 
C) Were defined in the Revenue Reconciliation Act of 1993. 
D) Are not amortized over the actual estimated useful life of the intangible asset. 
E) All of the above are true.

Question 8

The hybrid method of accounting involves the use of both the accrual and cash methods of accounting.

Accepted Answer

A) True 
 B)False

Question 9

Which one of the following is true about Modified Accelerated Cost Recovery System (MACRS)?

Accepted Answer

A) A building is depreciated using 200 percent declining balance depreciation. 
B) Buildings and autos both have the same depreciation life. 
C) A light duty business truck is depreciated using accelerated depreciation. 
D) All of the above are false. 
A) A building is depreciated using 200 percent declining balance depreciation. 
B) Buildings and autos both have the same depreciation life. 
C) A light duty business truck is depreciated using accelerated depreciation. 
D) All of the above are false.

Question 10

A taxpayer places a $50,000 5-year recovery period asset in service in 2017.This is the only asset placed in service in 2017.Assuming half-year convention,an election to expense under Section 179,and taxable income after all deductions except Section 179 of $5,000,what is the amount of Section 179 immediate expensing?

Accepted Answer

A) $0 
B) $5,000 
C) $25,000 
D) $30,000 
E) $50,000 
A) $0 
B) $5,000 
C) $25,000 
D) $30,000 
E) $50,000

Question 11

Mark the correct answer.Section 197 intangibles:

Accepted Answer

A) Are amortized based on current fair market value rather than their actual cost. 
B) Must be amortized over a 15 year life,regardless of their actual life. 
C) Include intangible assets created and not purchased by the taxpayer. 
D) Do not include purchased goodwill or going-concern value. 
A) Are amortized based on current fair market value rather than their actual cost. 
B) Must be amortized over a 15 year life,regardless of their actual life. 
C) Include intangible assets created and not purchased by the taxpayer. 
D) Do not include purchased goodwill or going-concern value.

Question 12

Countryside Acres Apartment Complex had the following transactions during the year:
Using the accrual method,calculate the net income:
   ​

Accepted Answer

The answer of Countryside Acres Apartment Complex had the following...

Question 13

If an asset's actual useful life is longer than the assigned recovery period,the MACRS tables cannot be used.

Accepted Answer

A) True 
 B)False

Question 14

An asset is placed in service on May 15,2017 and has a depreciable basis of $40,000.The asset is in the 7-year recovery class and the half-year convention applies.What is the maximum depreciation deduction that may be claimed for 2017,excluding the election to expense and bonus depreciation?

Accepted Answer

A) $2,572 
B) $5,144 
C) $5,716 
D) $25,000 
E) None of the above 
A) $2,572 
B) $5,144 
C) $5,716 
D) $25,000 
E) None of the above

Question 15

Bonus depreciation in 2017 permits taxpayers to deduct 100% of the cost of the asset in the year placed in service.

Accepted Answer

A) True 
 B)False

Question 16

On January 1,2017,Sandy,a sole proprietor,purchased for use in her business a used production machine (7-year property)at a cost of $4,000.Sandy does not purchase any other property during 2017 and has net income from her business of $80,000.If the standard recovery period table would allow $572 of depreciation expense on the $4,000 of equipment purchased in 2017,what is Sandy's maximum depreciation deduction including the Section 179 election to expense (but not bonus depreciation)for 2017?

Accepted Answer

A) $572 
B) $4,000 
C) $4,572 
D) $25,000 
E) None of the above 
A) $572 
B) $4,000 
C) $4,572 
D) $25,000 
E) None of the above

Question 17

Taxpayers may expense the cost of depreciable personal property placed in service during the year and used in a trade or business in an amount up to a maximum of $500,000 annually.

Accepted Answer

A) True 
 B)False

Question 18

Generally,cash basis taxpayers must account for payments of prepaid interest using the accrual method.

Accepted Answer

A) True 
 B)False

Question 19

Shellie purchased a passenger automobile on March 2,2017.She paid $15,000 for the automobile and can support business use of 85 percent.Calculate the amount of depreciation on the automobile for 2017 using the accelerated MACRS method (if available),assuming Shellie does not make the election to expense or claim bonus depreciation.

Accepted Answer

$2,550 = $15,000 × 20% (from Table 2)× 8

Question 20

Expenditures incurred to maintain an asset in good operating condition must be depreciated over the remaining useful life of the asset.

Accepted Answer

A) True 
 B)False

Taxpayers must use the straight-line method of depreciation for all productive assets.

Scott purchases a small business from Lew on July 1,2017.He paid the following amounts for the business: a.How much of the $458,000 purchase price is for Section 197 intangible assets? b.What amount can Scott deduct on his 2017 tax return as Section 197 intangible amortization?

Automobiles generally have a 3-year cost recovery period under the Modified Accelerated Cost Recovery System (MACRS).

If land declines in value,it may be depreciated for tax purposes.

Which of the following is true about the MACRS depreciation system?

Taxpayers choosing the election to expense:

Section 197 intangibles:

The hybrid method of accounting involves the use of both the accrual and cash methods of accounting.

Which one of the following is true about Modified Accelerated Cost Recovery System (MACRS)?

Mark the correct answer.Section 197 intangibles:

Countryside Acres Apartment Complex had the following transactions during the year: Using the accrual method,calculate the net income:

If an asset's actual useful life is longer than the assigned recovery period,the MACRS tables cannot be used.

An asset is placed in service on May 15,2017 and has a depreciable basis of $40,000.The asset is in the 7-year recovery class and the half-year convention applies.What is the maximum depreciation deduction that may be claimed for 2017,excluding the election to expense and bonus depreciation?

Bonus depreciation in 2017 permits taxpayers to deduct 100% of the cost of the asset in the year placed in service.

Taxpayers may expense the cost of depreciable personal property placed in service during the year and used in a trade or business in an amount up to a maximum of $500,000 annually.

Generally,cash basis taxpayers must account for payments of prepaid interest using the accrual method.

Expenditures incurred to maintain an asset in good operating condition must be depreciated over the remaining useful life of the asset.

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses Part I

Business Income and Expenses Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Capital Gains and Losses

Withholding Estimated Payments and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 7: Accounting Periods and Methods and Depreciation

Taxpayers must use the straight-line method of depreciation for all productive assets.

Scott purchases a small business from Lew on July 1,2017.He paid the following amounts for the business: ​ a.How much of the $458,000 purchase price is for Section 197 intangible assets? b.What amount can Scott deduct on his 2017 tax return as Section 197 intangible amortization?

Automobiles generally have a 3-year cost recovery period under the Modified Accelerated Cost Recovery System (MACRS).

If land declines in value,it may be depreciated for tax purposes.

Which of the following is true about the MACRS depreciation system?

Taxpayers choosing the election to expense:

Section 197 intangibles:

The hybrid method of accounting involves the use of both the accrual and cash methods of accounting.

Which one of the following is true about Modified Accelerated Cost Recovery System (MACRS)?

Mark the correct answer.Section 197 intangibles:

Countryside Acres Apartment Complex had the following transactions during the year: Using the accrual method,calculate the net income: ​

If an asset's actual useful life is longer than the assigned recovery period,the MACRS tables cannot be used.

An asset is placed in service on May 15,2017 and has a depreciable basis of $40,000.The asset is in the 7-year recovery class and the half-year convention applies.What is the maximum depreciation deduction that may be claimed for 2017,excluding the election to expense and bonus depreciation?

Bonus depreciation in 2017 permits taxpayers to deduct 100% of the cost of the asset in the year placed in service.

Taxpayers may expense the cost of depreciable personal property placed in service during the year and used in a trade or business in an amount up to a maximum of $500,000 annually.

Generally,cash basis taxpayers must account for payments of prepaid interest using the accrual method.

Expenditures incurred to maintain an asset in good operating condition must be depreciated over the remaining useful life of the asset.

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses Part I

Business Income and Expenses Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Capital Gains and Losses

Withholding Estimated Payments and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Scott purchases a small business from Lew on July 1,2017.He paid the following amounts for the business: a.How much of the $458,000 purchase price is for Section 197 intangible assets? b.What amount can Scott deduct on his 2017 tax return as Section 197 intangible amortization?

Countryside Acres Apartment Complex had the following transactions during the year: Using the accrual method,calculate the net income: