Exam 7: Accounting Periods and Methods and Depreciation

An asset (not an automobile)put in service in June 2017 has a depreciable basis of $2,055,000,a recovery period of 5 years,and is the only asset placed in service this year.Assuming bonus depreciation is used,a half-year convention,and the expensing election is made,what is the maximum amount of cost that can be deducted in 2017 (assume no income limitation)?

​Polly is a cash basis taxpayer with the following transactions during the year: Calculate Polly's income from her business for this calendar year.

The maximum annual Section 179 immediate expensing deduction in 2017 is $510,000.

Perry develops a successful advertising business that he subsequently sells to his competitor,Carl,for $108,000.He retires in the same town where he has always lived and done business.Carl insists that Perry sign a covenant not to compete.The advertising business has no tangible assets;Carl receives only the name of the business,the client lists and whatever going-concern value there is.How should Carl treat the $108,000 cost of the advertising business he purchased?

If an automobile is purchased for 100 percent use in the taxpayer's business,the annual automobile depreciation limitations do not apply.

Give the depreciable or amortizable lives for 2017 tax purposes for these assets: ​ Automobiles Business furniture Computers Residential real estate Commercial real estate Land Purchased goodwill

All S corporations must use the accrual basis of accounting.

Mary sells to her father,Robert,her shares in AA Corp for $55,000.The shares cost Mary $80,000.How much loss may Mary claim from the sale?

The annual automobile depreciation limitations apply only to the first four years of the asset's recovery period.

Under MACRS,the same method of depreciation (accelerated or straight-line)must be used for all property in a given class placed in service during a tax year.

From the records of Tom,a cash basis sole proprietor,the following information was available: What amount should Tom report as net earnings from self-employment?