Deck 7: Property Acquisitions and Cost Recovery Deductions

Question 1

13 Bonus depreciation and Section 179 expensing are never taken on the same asset.

Answer 1

False

Question 2

A donee's basis in a gift is always equal to the donor's basis.

Answer 2

False

Question 3

In a basket purchase of a group of assets, the purchaser and the seller can agree to the value of the separate assets.

Answer 3

True

Question 4

Section 179 expenses exceeding the annual cost limitation may be carried forward for five years only.

Question 5

If more than 40 percent of all personalty purchased during the year is placed in service during the last quarter of the year, the mid-quarter convention must be used.

Question 6

The alternative depreciation system uses a straight-line allocation of an asset's cost to determine depreciation expense.

Question 7

The cost of assets with useful lives expected to extend for 2 or more years are capitalized with costs allocated over their useful lives.

Question 8

Automobiles are subject to specific limitations on the amount of annual depreciation deductions.

Question 9

The mid-year and mid-month are acceptable conventions for depreciating personalty.

Question 10

The after-tax cost of a depreciable asset is dependent on the purchaser's marginal tax rate.

Question 11

Depletion is the term used for the cost allocation of wasting assets.

Question 12

Wolfgang, a calendar-year taxpayer, purchased residential rental realty in April of year 1 for $150,000 ($50,000 of which was for the land).

A)What is Wolfgang's MACRS depreciation deduction in years 1 and 2?
B)What is his depreciation deduction in year 20 if he disposes of the asset in August of that year?
C)How would your answers change to (a) and (b) if the property is nonresidential realty?

Question 13

Joan gives an asset valued at $12,000 with a basis of $10,000 to Mary; Joan dies six-months later leaving an asset valued at $10,000 with a basis of $12,000 to Larry.What are Mary's and Larry's bases in these assets if they are then sold for their fair market value?

A)Mary = $12,000; Larry = $12,000
B)Mary = $12,000; Larry = $10,000
C)Mary = $10,000; Larry = $12,000
D)Mary = $10,000; Larry = $10,000

Question 14

Research expenditures must be capitalized and amortized over the period the research is expected to benefit the business.

Question 15

The first year's depreciation for equipment acquired in October by a calendar-year business would be based on 1½ months if it was the only asset acquired that year.

Question 16

The cost of an asset with a useful life exceeding one year can be

A)Expensed immediately
B)Capitalized until disposal
C)Capitalized with part of the costs deducted annually
D)All of the above are possible depending on the asset

Question 17

The lease inclusion amount increases the deduction a person may take for business use of a leased automobile.

Question 18

The MACRS life for all realty is 27½ years.

Question 19

Section 179 expensing does not apply to used property.

Question 20

The basis in property acquired by inheritance is normally its fair market value at the date of the
decedent's death.

Question 21

Joe started a new business this year.He had purchased a computer two years ago for $4,000 and decided to use it in his business until he could afford a new system.He could purchase a new computer with the same specifications for $1,800, but his used computer is worth only $1,100.What is his computer's basis for depreciation?

A)$1,100
B)$1,800
C)$4,000
D)The computer cannot be depreciated because it was a personal asset.

Question 22

MACRS depreciation for 5-year assets is based on:

A)Straight-line depreciation
B)150 percent declining balance only
C)200 percent declining balance with a switch to straight-line
D)200 percent declining balance only

Question 23

Harris Corporation (a calendar-year taxpayer), acquired a 5-year asset costing $10,000 on October 2^nd.What are the first and last years of MACRS depreciation deductions using the mid-quarter convention?

A)$3,500 and $138
B)$2,500 and $426
C)$1,500 and $706
D)$500 and $958

Question 24

Barber Corporation purchased all the assets of TECO Corporation for $1,820,000.An appraisal yielded the following: the building had a fair market value of $1,200,000; equipment a value of $1,000,000; and office equipment a value of $400,000.What is the depreciable basis for the office equipment?

A)$400,000
B)$300,000
C)$280,000
D)$250,000

Question 25

When fully depreciating 7-year property, the final year of depreciation will be year:

A)5
B)6
C)7
D)8

Question 26

On November 7, 2019, Wilson Corporation acquires 7-year property for $25,000.This is the only property acquired this year and neither Section 179 expensing nor bonus depreciation were claimed.What is Wilson's total depreciation deduction for 2019?

A)$893
B)$1,785
C)$2,678
D)$3,573

Question 27

The first and last years of MACRS depreciation deductions for a 5-year asset costing $10,000 using the half-year convention are:

A)$2,000 and $2,000
B)$2,000 and $1,152
C)$2,000 and $576
D)$2,000 and $1,000

Question 28

Lopez Corporation is a calendar-year taxpayer.What is the MACRS depreciation percentage deduction for the last year for a 7-year asset acquired May 12 under the mid-quarter convention.

A)1.09%
B)3.33%
C)5.53%
D)7.64%

Question 29

The adjusted basis of an asset is:

A)Its acquisition price only
B)Acquisition cost less cost recovery
C)Acquisition cost less selling price
D)Only the cash used to purchase the asset

Question 30

Gonzalez Corporation is a calendar-year taxpayer.What is the MACRS depreciation percentage deduction for the first year for a 7-year asset acquired February 15 under the mid-quarter convention.

A)25%
B)17.85%
C)10.71%
D)3.57%

Question 31

The after-tax cost of an asset

A)Is higher for taxpayers with higher tax rates
B)Is lower for taxpayers with lower discount rates
C)Is higher for taxpayers with lower discount rates
D)Is not affected by the taxpayer's tax rate

Question 32

Moore Corporation (a calendar-year taxpayer), acquired a 5-year asset costing $10,000 on April 2^nd.What are the first and last years of MACRS depreciation deductions using the mid-quarter convention?

A)$3,500 and $138
B)$2,500 and $426
C)$1,500 and $706
D)$500 and $958

Question 33

The after-tax cost of an asset increases if

A)The cost recovery period is increased
B)The marginal tax rate increases
C)The discount percentage decreases
D)The asset's salvage value increases

Question 34

Gribble Corporation acquires the Dibble Corporation for $7,200,000.On appraisal, the assets of Dibble Corporation have a fair market value of $6,800,000.The excess of the purchase price over the fair market value of the assets:

A)Can be apportioned to the assets based on their relative fair market value.
B)Is goodwill that is amortized over 15 years.
C)Is goodwill that is amortized over 40 years.
D)Must be capitalized until Dibble is sold.

Question 35

On October 12, 2019, Wilson Corporation (a calendar-year taxpayer) acquires 5-year property for $9,000.This is the only property acquired this year and neither Section 179 expensing nor bonus depreciation were claimed.What is Wilson's total depreciation deduction for 2019?

A)$1,800
B)$1,350
C)$900
D)$450

Question 36

The first and last years of MACRS depreciation deductions for a 7-year asset costing $20,000 using the half-year convention are:

A)$4,000 and $1,152
B)$2,858 and $892
C)$2,000 and $576
D)$1,428 and $1,428

Question 37

When fully depreciating 5-year property, the final year of depreciation will be year:

A)6
B)5
C)4
D)3

Question 38

Peter received his uncle's coin collection as a gift when it was valued at $150,000.Over the years, the uncle had purchased the coins for a total of $75,000.The uncle paid a $15,000 gift tax on the gift.What is Peter's basis in the coin collection?

A)$75,000
B)$82,500
C)$90,000
D)$150,000

Question 39

MACRS means

A)Modified asset cost recovery system
B)Mid-year accelerated cost recovery system
C)Modified accelerated cost recovery system
D)Modified accelerated conventional recovery system

Question 40

Jack did not depreciate one of his machines that cost $40,000 because he had net operating losses for the last two years.Which of the following statements is true?

A)Jack's basis in the asset is $40,000 this year.
B)Jack can deduct three year's depreciation in the current year.
C)Jack must file amended returns to claim the depreciation for prior years.
D)If Jack sells the machine for $20,000 this year, he has a $20,000 loss.

Question 41

YumYum Corporation (a calendar-year corporation) moved into a new office building adjacent to its manufacturing plant in 2019.It purchased and placed in service the following assets during 2019: $\begin{array}{ccr}\underline{\text {Date Acquired}}&\underline{\text {Asset Description}}&\underline{\text {Cost}}\\\text { March 4 } & \text { New Office Building } & \$ 850,000 \\\text { March 15 } & \text { New Computer Equipment } & 45,000 \\\text { March 25 } & \text { New Office Furniture } & \$ 25,000 \\\text { August 20 } & \text { Used Machinery } & \$ 120,000 \\\text { December 15 } & \text { New Automobile } & \$ 30.000\end{array}$

All assets are used 100% for business use.The office building does not include the cost of the land on which it is located that was an additional $300,000.The corporation had $900,000 income from operations before calculating depreciation deductions.If YumYum Corporation made all elections available to maximize its overall depreciation deduction for 2019, what is YumYum's maximum depreciation deduction for the office building in 2019?

A)$17,281
B)$24,472
C)$28.302
D)$29,622

Question 42

On November 7, 2019, Wilson Corporation, a calendar-year taxpayer, acquires 7-year property for $2,650,000.This is the only property acquired this year.Section 179 expensing is elected, without application of bonus depreciation.What is the maximum deduction allowable under Section 179 for Wilson for 2019?

A)$920,000
B)$1,020,000
C)$2,550,000
D)$2,650,000

Question 43

Allen Corporation acquired 5-year property costing $150,000 on September 10, 2019.This is the only property acquired this year and Allen elects to expense the maximum amount under Section 179.Allen's income before deducting depreciation is $15,000.What is the maximum amount that Allen can deduct in 2019 for Section 179 expensing?

A)$10,000
B)$15,000
C)$25,000
D)$150,000

Question 44

YumYum Corporation (a calendar-year corporation) moved into a new office building adjacent to its manufacturing plant in 2019.It purchased and placed in service the following assets during 2019: $\begin{array}{ccr}\underline{\text {Date Acquired}}&\underline{\text {Asset Description}}&\underline{\text {Cost}}\\\text { March 4 } & \text { New Office Building } & \$ 850,000 \\\text { March 15 } & \text { New Computer Equipment } & 45,000 \\\text { March 25 } & \text { New Office Furniture } & \$ 25,000 \\\text { August 20 } & \text { Used Machinery } & \$ 120,000 \\\text { December 15 } & \text { New Automobile } & \$ 30.000\end{array}$

All assets are used 100% for business use.The office building does not include the cost of the land on which it is located that was an additional $300,000.The corporation had $900,000 income from operations before calculating depreciation deductions.YumYum Corporation made any elections available to maximize its overall depreciation deduction for 2019.What is its maximum depreciation deduction on the new automobile in 2019?

A)$10,000
B)$11,160
C)$18,100
D)$30,000

Question 45

Rodriguez Corporation acquired 7-year property costing $450,000 on October 1, 2019.This is the only property acquired this year and Rodriguez elects to expense the maximum amount under Section 179 without applying bonus depreciation.Rodriguez's income before deducting depreciation is $320,000.What is the maximum amount that Rodriguez can deduct in 2019 for Section 179 expensing?

A)$25,000
B)$130,000
C)$320,000
D)$450,000

Question 46

Coralbay, a calendar-year corporation, purchased used office furniture for $240,000 and new machines for $1,880,000 in July 2019.What is Coralbay's maximum cost recovery deduction for 2019?

A)$240,000
B)$510,000
C)$1,000,000
D)$2,120,000

Question 47

Useful lives for realty include all of the following except:

A)25 years
B)27.5 years
C)39 years
D)40 years

Question 48

What is the maximum amount that can be spent on depreciable personalty in the last quarter of the year to avoid the mid-quarter convention if $240,000 of equipment was purchased in the first three quarters (and neither Sec.179 nor bonus depreciation is claimed)?

A)$80,000
B)$968,000
C)$160,000
D)$240,000

Question 49

Momee Corporation, a calendar-year corporation, bought only one asset in 2014, a crane it purchased for $700,000 on November 24.It disposed of the asset in April, 2019.What is its depreciation deduction for this asset in 2019 if cost recovery was determined using only regular MACRS?

A)$62,510
B)$61,110
C)$31,255
D)$22,916

Question 50

Chipper, a calendar-year corporation, purchased new machinery for $1,135,000 in February, 2019.In October, it purchased $2,105,000 of used machinery.What is Chipper's maximum cost recovery deduction for 2019?

A)$1,243,621
B)$3,240,000
C)$1,038,114
D)$577,226

Question 51

YumYum Corporation (a calendar-year corporation) moved into a new office building adjacent to its manufacturing plant in 2019.It purchased and placed in service the following assets during 2019: $\begin{array}{ccr}\underline{\text {Date Acquired}}&\underline{\text {Asset Description}}&\underline{\text {Cost}}\\\text { March 4 } & \text { New Office Building } & \$ 850,000 \\\text { March 15 } & \text { New Computer Equipment } & 45,000 \\\text { March 25 } & \text { New Office Furniture } & \$ 25,000 \\\text { August 20 } & \text { Used Machinery } & \$ 120,000 \\\text { December 15 } & \text { New Automobile } & \$ 30.000\end{array}$

All assets are used 100% for business use.The office building does not include the cost of the land on which it is located that was an additional $300,000.The corporation had $900,000 income from operations before calculating depreciation deductions.If YumYum does not apply Section 179 expensing or bonus depreciation, but elects to use straight-line depreciation on all of its assets, how much is its 2019 depreciation deduction?

A)$17,281
B)$28,972
C)$35,134
D)$35,394

Question 52

On June 20, 2019 Baker Corporation (a calendar-year taxpayer) acquired 5-year equipment costing $30,000 and on October 28, 2019, it acquired 7-year equipment costing $160,000.Baker did not claim Section 179 expensing or bonus depreciation and no other assets were acquired during the year.Baker's depreciation for 2019 is:

A)$28,864
B)$27,152
C)$13,212
D)$7,212

Question 53

The only acceptable convention for MACRS realty is

A)Mid-week
B)Mid-month
C)Mid-quarter
D)Half-year

Question 54

YumYum Corporation (a calendar-year corporation) moved into a new office building adjacent to its manufacturing plant in 2019.It purchased and placed in service the following assets during 2019: $\begin{array}{ccr}\underline{\text {Date Acquired}}&\underline{\text {Asset Description}}&\underline{\text {Cost}}\\\text { March 4 } & \text { New Office Building } & \$ 850,000 \\\text { March 15 } & \text { New Computer Equipment } & 45,000 \\\text { March 25 } & \text { New Office Furniture } & \$ 25,000 \\\text { August 20 } & \text { Used Machinery } & \$ 120,000 \\\text { December 15 } & \text { New Automobile } & \$ 30.000\end{array}$

All assets are used 100% for business use.The office building does not include the cost of the land on which it is located that was an additional $300,000.The corporation had $900,000 income from operations before calculating depreciation deductions.If YumYum Corporation made all elections available to maximize its overall depreciation deduction for 2019, what would its maximum cost recovery deduction be for 2019?

A)$190,000
B)$225,381
C)$229,601
D)$248,441

Question 55

YumYum Corporation (a calendar-year corporation) moved into a new office building adjacent to its manufacturing plant in 2019.It purchased and placed in service the following assets during 2019: $\begin{array}{ccr}\underline{\text {Date Acquired}}&\underline{\text {Asset Description}}&\underline{\text {Cost}}\\\text { March 4 } & \text { New Office Building } & \$ 850,000 \\\text { March 15 } & \text { New Computer Equipment } & 45,000 \\\text { March 25 } & \text { New Office Furniture } & \$ 25,000 \\\text { August 20 } & \text { Used Machinery } & \$ 120,000 \\\text { December 15 } & \text { New Automobile } & \$ 30.000\end{array}$

All assets are used 100% for business use.The office building does not include the cost of the land on which it is located that was an additional $300,000.The corporation had $900,000 income from operations before calculating depreciation deductions.What is the maximum Section 179 deduction YumYum can claim for 2019?

A)$500,000
B)$253,160
C)$208,100
D)$25,000

Question 56

Gregory Corporation, a calendar-year corporation, purchased an office building in March of year 1.In September of year 17, it sold the building.What fraction must be applied to the MACRS percentage to determine the year 17 depreciation?

A)3/12
B)7.5/12
C)8.5/12
D)9/12

Question 57

Conrad Corporation has a June 30 year end.What is the MACRS depreciation percentage deduction for the first year for a 5-year asset acquired October 15 under the mid-quarter convention.

A)35%
B)25%
C)15%
D)5%

Question 58

All of the following are acceptable conventions for MACRS property except:

A)Mid-week
B)Mid-month
C)Mid-quarter
D)Half-year

Question 59

Martin Corporation acquired 5-year property costing $2,185,000 on September 10, 2019.This is the only property acquired this year.What is Martin's maximum total cost recovery deduction for 2019 is:

A)$542,000
B)$510,000
C)$2,185,000
D)$1,000,000

Question 60

During the year, Garbin Corporation (a calendar-year corporation that manufactures furniture) purchased the following assets: $\begin{array}{lcr}\underline{\text { Date }} & \underline{\text { Asset }}& \underline{\text { Cost}} \\\text { February 15 } & \text {Tools } & \$40,000 \\\text { March 3 } &\text { Machines}&50,000 \\\text { October 6 } & \text { Office Building }& 110,000 \end{array}$
In computing depreciation of these assets, which of the following averaging conventions will be used?

A)Half-year and mid-month
B)Mid-quarter and mid-month
C)Half-year, mid-quarter, and mid-month
D)Mid-quarter only

Question 61

The lease inclusion amount:

A)Increases the annual lease payments.
B)Applies to all leased autos regardless of value.
C)Is larger in the earlier years of the lease.
D)Is a substitute for the depreciation limits applicable to purchased autos.

Question 62

Zachary purchased a new car on August 1, 2018 for $14,500.His records indicate that he uses the car 45 percent for business and 55 percent for personal use.What are his cost recovery deductions for 2018 and 2019?

A)$653; $1,305
B)$1,377; $2,205
C)$6,625; $6,525
D)$14,500; $0

Question 63

Sanjuro Corporation (a calendar-year corporation) purchased and placed in service the following assets during 2019: $\begin{array}{lcr}\underline{\text {Date Acquired}}&\underline{\text {Asset Description}}&\underline{\text {Cost}}\\\text { February 18}& \text { Warehouse Building } & \$ 2,450,000 \\ \text { June 2 } & \text { Automobile } & 30,000 \\\text { August } 18& \text { Computer Equipment } & 220,000 \\\text { September } 20 & \text { Machinery } & 1,050,000 \\\text { December } 15& \text { Office Equipment } & 885,000\end{array}$

All assets are used 100% for business use.The warehouse building does not include the cost of the land on which it is located which was an additional $1,000,000.The corporation has $3,000,000 income from operations before calculating depreciation deductions.Sanjuro Corporation made whatever elections were necessary to maximize its overall depreciation deduction for 2019.
What would be Sanjuro Corporation's cost recovery deduction for the office equipment for 2020?

A)$0
B)$129,797
C)$442,500
D)$18,000

Question 64

Software purchased in 2019 is eligible for

A)MACRS depreciation only
B)straight-line amortization only
C)Section 179 expensing and bonus depreciation
D)Section 179 expensing but not bonus depreciation

Question 65

Sanjuro Corporation (a calendar-year corporation) purchased and placed in service the following assets during 2019: $\begin{array}{lcr}\underline{\text {Date Acquired}}&\underline{\text {Asset Description}}&\underline{\text {Cost}}\\\text { February 18}& \text { Warehouse Building } & \$ 2,450,000 \\ \text { June 2 } & \text { Automobile } & 30,000 \\\text { August } 18& \text { Computer Equipment } & 220,000 \\\text { September } 20 & \text { Machinery } & 1,050,000 \\\text { December } 15& \text { Office Equipment } & 885,000\end{array}$
All assets are used 100% for business use.The warehouse building does not include the cost of the land on which it is located which was an additional $1,000,000.The corporation has $3,000,000 income from operations before calculating depreciation deductions.Sanjuro Corporation made whatever elections were necessary to maximize its overall depreciation deduction for 2019.What was Sanjuro Corporation's cost recovery deduction for the warehouse in 2019?

A)$55,052
B)$60,295
C)$70,536
D)$77,959

Question 66

All of the following are characteristics of percentage depletion except:

A)Depletion is determined using a statutory percentage times gross income.
B)Percentage depletion can exceed the property's cost.
C)Depletion in excess of cost results in a negative basis for property.
D)Is an investment incentive provision.

Question 67

In May 2018, Stephen acquired a used automobile for $12,000 that he used 75% for business.Neither Section 179 election nor bonus depreciation was claimed.In 2019, Stephen's business use of the automobile decreases to 45%.As a result of this change in business use:

A)The change does not affect the way Stephen computes his 2019 depreciation
B)Stephen's depreciation in 2019 is $2,250.
C)Stephen must recapture $900 as ordinary income in 2019
D)Stephen must amend the 2018 tax return and recompute depreciation.

Question 68

On June, 20, 2019, Simon Corporation (a calendar-year corporation) purchased and placed in service a new automobile costing $68,000.This vehicle is used 100% for business.Simon makes whatever elections are necessary to maximum its overall depreciation deduction for the year of acquisition. What would be Simon Corporation's cost recovery deduction for the automobile for 2020?

A)$0
B)$15,968
C)$16,100
D)$18,100

Question 69

Bangor Company incurred $70,000 of research costs in year 1.In May of year 2, it began to sell the products developed through this research.Which of the following is correct regarding these expenditures?

A)Bangor can deduct $9,333 in year 2.
B)Bangor can deduct $35,000 of the costs in each of years 1 and 2
C)Bangor can deduct all $70,000 in year 2.
D)Bangor cannot deduct the expenditures unless it abandons the project.

Question 70

On June, 20, 2019, Simon Corporation (a calendar-year corporation) purchased and placed in service a new automobile costing $69,000.This vehicle is used 100% for business.Simon makes whatever elections are necessary to maximize its overall depreciation deduction for the year of acquisition. What is Simon Corporation's adjusted basis for the automobile at the end of 2021?

A)$0
B)$18,640
C)$25,100
D)$34,800

Question 71

Sanjuro Corporation (a calendar-year corporation) purchased and placed in service the following assets during 2019: $\begin{array}{lcr}\underline{\text {Date Acquired}}&\underline{\text {Asset Description}}&\underline{\text {Cost}}\\\text { February 18}& \text { Warehouse Building } & \$ 2,450,000 \\ \text { June 2 } & \text { Automobile } & 30,000 \\\text { August } 18& \text { Computer Equipment } & 220,000 \\\text { September } 20 & \text { Machinery } & 1,050,000 \\\text { December } 15& \text { Office Equipment } & 885,000\end{array}$

All assets are used 100% for business use.The warehouse building does not include the cost of the land on which it is located which was an additional $1,000,000.The corporation has $3,000,000 income from operations before calculating depreciation deductions.Sanjuro Corporation made whatever elections were necessary to maximize its overall depreciation deduction for 2019.
To maximize its total cost recovery deduction, what was Sanjuro Corporation's cost recovery deduction for the computer equipment for 2019?

A)$44,000
B)$110,000
C)$132,000
D)$220,000

Question 72

On June, 20, 2019, Simon Corporation (a calendar-year corporation) purchased and placed in service a new automobile costing $68,000.This vehicle is used 100% for business.Simon makes whatever elections are necessary to maximize its overall depreciation deduction for the year of acquisition. What is Simon Corporation's maximum cost recovery deduction for the automobile for 2022?

A)$0
B)$9,581
C)$9,700
D)$16,100

Question 73

Sanjuro Corporation (a calendar-year corporation) purchased and placed in service the following assets during 2019: $\begin{array}{lcr}\underline{\text {Date Acquired}}&\underline{\text {Asset Description}}&\underline{\text {Cost}}\\\text { February 18}& \text { Warehouse Building } & \$ 2,450,000 \\ \text { June 2 } & \text { Automobile } & 30,000 \\\text { August } 18& \text { Computer Equipment } & 220,000 \\\text { September } 20 & \text { Machinery } & 1,050,000 \\\text { December } 15& \text { Office Equipment } & 885,000\end{array}$

All assets are used 100% for business use.The warehouse building does not include the cost of the land on which it is located which was an additional $1,000,000.The corporation has $3,000,000 income from operations before calculating depreciation deductions.Sanjuro Corporation made whatever elections were necessary to maximize its overall depreciation deduction for 2019.
What would be Sanjuro Corporation's cost recovery deduction for the warehouse for 2020 if it is sold in November of 2020?

A)$62,818
B)$54,966
C)$48,170
D)$3,724

Question 74

Sanjuro Corporation (a calendar-year corporation) purchased and placed in service the following assets during 2019: $\begin{array}{lcr}\underline{\text {Date Acquired}}&\underline{\text {Asset Description}}&\underline{\text {Cost}}\\\text { February 18}& \text { Warehouse Building } & \$ 2,450,000 \\ \text { June 2 } & \text { Automobile } & 30,000 \\\text { August } 18& \text { Computer Equipment } & 220,000 \\\text { September } 20 & \text { Machinery } & 1,050,000 \\\text { December } 15& \text { Office Equipment } & 885,000\end{array}$

All assets are used 100% for business use.The warehouse building does not include the cost of the land on which it is located which was an additional $1,000,000.The corporation has $3,000,000 income from operations before calculating depreciation deductions.Sanjuro Corporation made whatever elections were necessary to maximize its overall depreciation deduction for 2019.
What was Sanjuro Corporation's maximum total cost recovery deduction for 2019?

A)$512,550
B)$1,731,707
C)$2,175,000
D)$2,228,152

Question 75

Sanjuro Corporation (a calendar-year corporation) purchased and placed in service the following assets during 2019: $\begin{array}{lcr}\underline{\text {Date Acquired}}&\underline{\text {Asset Description}}&\underline{\text {Cost}}\\\text { February 18}& \text { Warehouse Building } & \$ 2,450,000 \\ \text { June 2 } & \text { Automobile } & 30,000 \\\text { August } 18& \text { Computer Equipment } & 220,000 \\\text { September } 20 & \text { Machinery } & 1,050,000 \\\text { December } 15& \text { Office Equipment } & 885,000\end{array}$

All assets are used 100% for business use.The warehouse building does not include the cost of the land on which it is located which was an additional $1,000,000.The corporation has $3,000,000 income from operations before calculating depreciation deductions.Sanjuro Corporation made whatever elections were necessary to maximize its overall depreciation deduction for 2019.To maximize its total cost recovery deduction, what was Sanjuro Corporation's cost recovery deduction for the office equipment for 2019?

A)$2,185,000
B)$1,000,000
C)$885,000
D)$442,500

Question 76

Sanjuro Corporation (a calendar-year corporation) purchased and placed in service the following assets during 2019: $\begin{array}{lcr}\underline{\text {Date Acquired}}&\underline{\text {Asset Description}}&\underline{\text {Cost}}\\\text { February 18}& \text { Warehouse Building } & \$ 2,450,000 \\ \text { June 2 } & \text { Automobile } & 30,000 \\\text { August } 18& \text { Computer Equipment } & 220,000 \\\text { September } 20 & \text { Machinery } & 1,050,000 \\\text { December } 15& \text { Office Equipment } & 885,000\end{array}$

All assets are used 100% for business use.The warehouse building does not include the cost of the land on which it is located which was an additional $1,000,000.The corporation has $3,000,000 income from operations before calculating depreciation deductions.Sanjuro Corporation made whatever elections were necessary to maximize its overall depreciation deduction for 2019.
What would be Sanjuro Corporation's cost recovery deduction for the computer equipment for 2020?

A)$0
B)$44,000
C)$110,000
D)$220,000

Question 77

Sanjuro Corporation (a calendar-year corporation) purchased and placed in service the following assets during 2019: $\begin{array}{lcr}\underline{\text {Date Acquired}}&\underline{\text {Asset Description}}&\underline{\text {Cost}}\\\text { February 18}& \text { Warehouse Building } & \$ 2,450,000 \\ \text { June 2 } & \text { Automobile } & 30,000 \\\text { August } 18& \text { Computer Equipment } & 220,000 \\\text { September } 20 & \text { Machinery } & 1,050,000 \\\text { December } 15& \text { Office Equipment } & 885,000\end{array}$

All assets are used 100% for business use.The warehouse building does not include the cost of the land on which it is located which was an additional $1,000,000.The corporation has $3,000,000 income from operations before calculating depreciation deductions.Sanjuro Corporation made whatever elections were necessary to maximize its overall depreciation deduction for 2019.
What would be Sanjuro Corporation's maximum cost recovery deduction for the warehouse for 2020?

A)$62,818
B)$55,052
C)$49,809
D)$44,566

Question 78

Research and experimentation expenditures can be:

A)Expensed when incurred.
B)Amortized over 60 or more months.
C)Either (a) or (b).
D)Neither (a) nor (b).

Question 79

Sanjuro Corporation (a calendar-year corporation) purchased and placed in service the following assets during 2019: $\begin{array}{lcr}\underline{\text {Date Acquired}}&\underline{\text {Asset Description}}&\underline{\text {Cost}}\\\text { February 18}& \text { Warehouse Building } & \$ 2,450,000 \\ \text { June 2 } & \text { Automobile } & 30,000 \\\text { August } 18& \text { Computer Equipment } & 220,000 \\\text { September } 20 & \text { Machinery } & 1,050,000 \\\text { December } 15& \text { Office Equipment } & 885,000\end{array}$

All assets are used 100% for business use.The warehouse building does not include the cost of the land on which it is located which was an additional $1,000,000.The corporation has $3,000,000 income from operations before calculating depreciation deductions.Sanjuro Corporation made whatever elections were necessary to maximize its overall depreciation deduction for 2019.To maximize its total cost recovery deduction, what was Sanjuro Corporation's cost recovery deduction for the automobile for 2019?

A)$30,000
B)$18,100
C)$18,000
D)$16,100