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Exam 10: Property Acquisition and Cost Recovery

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Question 31

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During April of the current year, Ronen purchased a warehouse that he used for business purposes. The basis was $1,604,000. Calculate the maximum depreciation deduction during the current year. (Use MACRS Table 5.)(Round final answer to the nearest whole number.)

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The asset's recovery ...

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Question 32

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The mid-month convention applies to real property in the year of acquisition and disposition.

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B) False

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Question 33

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Tasha LLC purchased furniture (seven-year property) on April 20 for $20,000 and used the half-year convention to depreciate it. Tasha did not take §179 or bonus depreciation in the year it acquired the furniture. During the current year, which is the fourth year Tasha LLC owned the property, the property was disposed of on December 15. Calculate the maximum depreciation expense. (Use MACRS Table 1) (Round final answer to the nearest whole number.)

Which of the following assets is not eligible for bonus depreciation?

In general, a taxpayer should select longer-lived property for the §179 immediate expensing election.

If the business-use percentage for listed property falls below 50 percent, the only adjustment isthat all future depreciation must be calculated under the straight-line method.

During April of the current year, Ronen purchased a warehouse that he used for business purposes. The basis was $1,600,000. Calculate the maximum depreciation deduction during the current year. (Use MACRS Table 5.)

Which of the following business assets is not depreciated?

Depreciation is currently computed under the Modified Accelerated Cost Recovery System (MACRS).

Bonus depreciation is used as a stimulus tool by tax policy makers.

Jasmine started a new business in the current year. She incurred $16,000 of start-up costs. How much of the start-up costs can be immediately deducted (excluding amounts amortized over 180 months) for the year?

The §179 immediate expensing election phases out based upon the amount of tangible personal property a taxpayer places in service during the year.

In general, major integrated oil and gas producers may take the greater of cost or percentage depletion.

Daschle LLC completed some research and development during June of the current year. The related costs were $72,600. If Daschle wants to capitalize and amortize the costs as quickly as possible, what is the total amortization amount Daschle may deduct during the current year?

Tom Tom LLC purchased a rental house and land during the current year for $150,000. The purchase price was allocated as follows: $100,000 to the building and $50,000 to the land. The property was placed in service on May 22. Calculate Tom Tom's maximum depreciation for this first year. (Use MACRS Table 3.)

Businesses may immediately expense research and experimentation expenditures, or they may elect to capitalize these costs and amortize them using the straight-line method over a period of not less than 60 months.

An asset's capitalized cost basis includes only the actual purchase price, whereas expenses to purchase, prepare the asset for use, and begin using the asset are immediately expensed.

Daschle LLC completed some research and development during June of the current year. The related costs were $60,000. If Daschle wants to capitalize and amortize the costs as quickly as possible, what is the total amortization amount Daschle may deduct during the current year?

Jaussi purchased a computer several years ago for $2,200 and used it for personal purposes. On November 10 ^th of the current year, when the fair market value of the computer was $800, Jaussi converted it to business use. What is Jaussi's tax basis for the computer?

The MACRS recovery period for automobiles and computers is: