FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 8: Depreciation, Cost Recovery, Amortization, and Depletion

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following assets would be subject to cost recovery?

A) A painting by Picasso hanging on a doctor's office wall.
B) An antique vase in a doctor's waiting room.
C) Landscaping around the doctor's office.
D) a., b., and c.
E) None of the above.

Correct Answer

verified

Show Answer

Question 52

True/False

Review LaterAdd Note

Review Later

The costs of qualified leasehold improvements qualify for additional first-year depreciation.

Correct Answer

verified

Show Answer

Question 53

True/False

Review LaterAdd Note

The cost recovery method for new farm equipment placed in service during 2014 is 200% declining balance.

Goodwill associated with the acquisition of a business cannot be amortized.

Cost depletion is determined by multiplying the depletion cost per unit by the number of units sold.

The amortization period in 2014 for $58,000 of startup expenses is 180 months.

The statutory dollar cost recovery limits under § 280F does apply to all automobiles.

James purchased a new business asset (three-year personalty) on July 23, 2013, at a cost of $40,000. James takes additional first-year depreciation Determine the cost recovery deduction for 2013.

Taxable income for purposes of § 179 limited expensing is computed by including the MACRS deduction.

On June 1, 2014, Red Corporation purchased an existing business. With respect to the acquired assets of the business, Red allocated $300,000 of the purchase price to a patent. The patent will expire in 20 years. Determine the total amount that Red may amortize for 2014 for the patent.

On March 1, 2014, Lana leases and places in service a passenger automobile. The lease will run for five years and the payments are $500 per month. During 2014, she uses her car 60% for business and 40% for personal activities. Assuming the dollar amount from the IRS table is $20, determine Lana's inclusion as a result of the lease.

Under the MACRS straight-line election for personalty, only the half-year convention is applicable.

On June 1, 2014, Norm leases a taxi and places it in service. The lease payments are $1,000 per month. Assuming the dollar amount from the IRS table is $241, determine Norm's inclusion amount.

Property used for the production of income is not eligible for § 179 expensing.

The cost recovery period for 3-year class property is 4 years.

The cost recovery basis for property converted from personal use to business use may be the fair market value of the property at the time of the conversion.

On June 1, 2014, Sam purchased used farm machinery for $150,000. Sam used the machinery in connection with his farming business. Sam does not elect to expense assets under § 179. Sam has, however, made an election to not have the uniform capitalization rules apply to the farming business. Determine the cost recovery deduction for 2014.

Discuss the criteria used to determine whether a building is residential or nonresidential realty. Also explain the tax consequences resulting from this determination if the property is placed in service in 2014.

On February 20, 2014, Susan paid $200,000 for a leasehold improvement to an office building that she is going to lease to John. The leasehold improvement is not a qualified leasehold improvement. The lease will begin on June 1, 2014, and terminate on May 31, 2024. At the termination of the lease, the improvement will be worthless. Determine Susan's deductible loss as a result of the termination of the lease.

Carlos purchased an apartment building on November 16, 2014, for $3,000,000. Determine the cost recovery for 2015.