Question 1

Under the MACRS system,the same convention that applies in the year of acquisition (e.g.,half-year,mid-quarter,or mid-month)also applies in the year of disposition.

Accepted Answer

A) True 
 B)False

Question 2

If a company acquires goodwill in connection with the acquisition of a business,the goodwill is amortizable over a 60-month period.

Accepted Answer

A) True 
 B)False

Question 3

Lincoln purchases nonresidential real property costing $300,000 and places it in service in March 2013.What is Lincoln's 2014 depreciation on the property?

Accepted Answer

A) $6,099 
B) $7,692 
C) $8,637 
D) $10,908

Question 4

The mid-quarter convention applies to personal and real property.

Accepted Answer

A) True 
 B)False

Question 5

On May 1,2012,Empire Properties Corp.,a calendar year taxpayer,purchased an office building for $1,000,000,of which $400,000 was allocable to the land.The corporation sold the property this year on September 23,2014.
a.What was the corporation's depreciation for the building,using statutory percentages under MACRS for 2012?
b.What was the corporation's depreciation for the building,using statutory percentages under MACRS
for 2014?

Accepted Answer

The answer of On May 1,2012,Empire Properties Corp.,a calendar year...

Question 6

Under MACRS,tangible personal property used in trade or business purchased and placed into service on March 1,2014 should be depreciated for 10 months in 2014.Assume the business uses a calendar tax year.

Accepted Answer

A) True 
 B)False

Question 7

Intangible drilling and development costs (IDCs)may be deducted as an expense or may be capitalized.

Accepted Answer

A) True 
 B)False

Question 8

Residential rental property is defined as property from which more than 80% of the gross rental income is rental income from dwelling units.

Accepted Answer

A) True 
 B)False

Question 9

Mehmet,a calendar-year taxpayer,acquires 5-year tangible personal property in 2014 and does not use Sec.179. Mehmet places the property in service on the following schedule:
  What is the total depreciation for 2012?

Accepted Answer

The answer of Mehmet,a calendar-year taxpayer,acquires 5-year tangible personal property...

Question 10

Any Section 179 deduction that is not allowed currently due to the taxable income limitation may be carried over and deducted in future years.

Accepted Answer

A) True 
 B)False

Question 11

Sec.179 tax benefits are recaptured if at any time an asset is converted to personal use.

Accepted Answer

A) True 
 B)False

Question 12

In the current year George,a college professor,acquired a computer system (5-year property)for $1,000 and used the computer 80% for teaching and research-related activities and the remaining 20% for personal use.Because George's employer provides him with a computer in his office at the university,the employer does not require him to have a computer at home.No election was made regarding Sec.179.The maximum depreciation deduction is

Accepted Answer

A) $0. 
B) $200. 
C) $160. 
D) $800.

Question 13

If a new luxury automobile is used 100% for business and placed in service in 2014,the maximum MACRS depreciation on the vehicle for 2014 is $3,160.

Accepted Answer

A) True 
 B)False

Question 14

J.R.acquires an oil and gas property interest for $300,000.J.R.expects to recover 50,000 barrels of oil.Intangible drilling and development costs are $80,000 and are charged to expense.Other expenses are $20,000.During the year,13,000 barrels of oil are sold for $170,000.J.R.'s depletion deduction is

Accepted Answer

A) $25,500. 
B) $35,000. 
C) $70,000. 
D) $78,000.

Question 15

On October 2,2014,Dave acquired and placed into service 5-year business equipment costing $70,000.No other acquisitions were made during the year.Dave does not use Sec.179 expensing.The depreciation for this year is using the most accelerated method possible is

Accepted Answer

A) $0. 
B) $3,500. 
C) $7,000. 
D) $10,003.

Question 16

All of the following are true with regard to the alternative depreciation system except

Accepted Answer

A) the principal type of property for which ADS is required is any tangible property which is used predominantly outside of the United States. 
B) the ADS election is available to real property on a property by property basis. 
C) the ADS election is available to personal property on a property by property basis. 
D) once the ADS election is made for specified property,it is irrevocable.

Question 17

If the business usage of listed property is less than or equal to 50% of its total usage,depreciation is calculated using the

Accepted Answer

A) regular MACRS tables. 
B) alternative depreciation system. 
C) it may not be depreciated. 
D) regular MACRS tables and a mid-month convention.

Question 18

In order for an asset to be depreciated in the year of purchase,it must be placed in service before year's end.

Accepted Answer

A) True 
 B)False

Question 19

Stellar Corporation purchased all of the assets of Bellavia Company as of January 1 this year for $1 million. Included in the assets acquired are the following intangible assets:
  What is Stellar's maximum amortization deduction for the year?

Accepted Answer

The answer of Stellar Corporation purchased all of the assets...

Question 20

The Section 179 expensing election is available on an annual basis for property purchased during the year.

Accepted Answer

A) True 
 B)False

Exam 20: Depreciation cost Recovery amortization and Depletion

Under the MACRS system,the same convention that applies in the year of acquisition (e.g.,half-year,mid-quarter,or mid-month)also applies in the year of disposition.

If a company acquires goodwill in connection with the acquisition of a business,the goodwill is amortizable over a 60-month period.

Lincoln purchases nonresidential real property costing $300,000 and places it in service in March 2013.What is Lincoln's 2014 depreciation on the property?

The mid-quarter convention applies to personal and real property.

Under MACRS,tangible personal property used in trade or business purchased and placed into service on March 1,2014 should be depreciated for 10 months in 2014.Assume the business uses a calendar tax year.

Intangible drilling and development costs (IDCs)may be deducted as an expense or may be capitalized.

Residential rental property is defined as property from which more than 80% of the gross rental income is rental income from dwelling units.

Mehmet,a calendar-year taxpayer,acquires 5-year tangible personal property in 2014 and does not use Sec.179. Mehmet places the property in service on the following schedule: What is the total depreciation for 2012?

Any Section 179 deduction that is not allowed currently due to the taxable income limitation may be carried over and deducted in future years.

Sec.179 tax benefits are recaptured if at any time an asset is converted to personal use.

If a new luxury automobile is used 100% for business and placed in service in 2014,the maximum MACRS depreciation on the vehicle for 2014 is $3,160.

On October 2,2014,Dave acquired and placed into service 5-year business equipment costing $70,000.No other acquisitions were made during the year.Dave does not use Sec.179 expensing.The depreciation for this year is using the most accelerated method possible is

All of the following are true with regard to the alternative depreciation system except

If the business usage of listed property is less than or equal to 50% of its total usage,depreciation is calculated using the

In order for an asset to be depreciated in the year of purchase,it must be placed in service before year's end.

Stellar Corporation purchased all of the assets of Bellavia Company as of January 1 this year for $1 million. Included in the assets acquired are the following intangible assets: What is Stellar's maximum amortization deduction for the year?

The Section 179 expensing election is available on an annual basis for property purchased during the year.