Question 1

Greta,a calendar-year taxpayer,acquires 5-year tangible personal property in 2017 and places the property in service on the following schedule:
  Greta elects to expense the maximum under Sec.179,and selects the property placed into service on November 8.The property is not eligible for bonus depreciation.Her business's taxable income before Sec.179 is $790,000.What is the total cost recovery deduction (depreciation and Sec.179)for 2017?

Accepted Answer

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

Question 2

Everest Corp.acquires a machine (seven-year property)on January 10,2017 at a cost of $2,042,000.Everest makes the election to expense the maximum amount under Sec.179.The property is not eligible for bonus depreciation.
a.Assume that the taxable income from trade or business is $1,500,000.
(1)What is the amount of the Sec.179 expensing deduction for the current year?
(2)What is the amount of the Sec.179 carryover to the next tax year?
(3)What is the amount of depreciation allowed?
b.Assume instead that the taxable income from trade or business is $400,000.
(1)What is the amount of the Sec.179 expensing deduction for the current year?
(2)What is the amount of the Sec.179 carryover to the next tax year?
(3)What is the amount of depreciation allowed this year?

Accepted Answer

The answer of Everest Corp.acquires a machine (seven-year property)on January...

Question 3

Mehmet,a calendar-year taxpayer,acquires 5-year tangible personal property in 2017 and does not use Sec.179.The property does not qualify for bonus depreciation.Mehmet places the property in service on the following schedule:
  What is the total depreciation for 2016?

Accepted Answer

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

Question 4

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)In order for an employee to take a deduction for listed property used in employment-related activities,the property must be used more than 50% for trade or business and must be for the convenience of the employer and be required as a condition of employment.Since George is not required to purchase a computer for home,no depreciation is allowed.

Question 5

Enrico is a self-employed electrician.In May of the current year,Enrico acquired a used van (5-year property)for $12,000.He used the van 80% for business and 20% for personal purposes.Enrico does not take any Sec.179 deduction.The maximum depreciation deduction for the van is

Accepted Answer

D)Although the van is listed property,since it is used more than 50% in trade or business,MACRS depreciation may be used.The asset is not eligible for bonus depreciation.Depreciation is $12,000 × .20 × .80 = $1,920.Only the portion used for trade or business is depreciable.

Question 6

On June 30,2017,Temika purchased office furniture (7-year property)costing $400,000 and computers (5-year property)with a cost of $250,000.She uses Sec.179,but the assets do not qualify for bonus depreciation.Her business income is $790,000 without considering Sec.179.How should she allocate the Sec.179 election in order to maximize her total cost recovery deductions (depreciation and Sec.179)for 2017 ?

Accepted Answer

The answer of On June 30,2017,Temika purchased office furniture (7-year...

Question 7

On May 1,2008,Empire Properties Corp. ,a calendar-year taxpayer,purchased an apartment building for $1,000,000,of which $400,000 was allocable to the land.The corporation sold the property this year on September 23,2017.
a.What was the corporation's depreciation for the building,using statutory percentages under MACRS for 2008?
b.What was the corporation's depreciation for the building,using statutory percentages under MACRS for 2017?

Accepted Answer

The answer of On May 1,2008,Empire Properties Corp. ,a calendar-year...

Question 8

In January of 2017,Brett purchased a Porsche for $100,000 to be used in his business.Brett drove the car 83 percent of the time for business.What is the maximum amount that Brett may deduct in 2017?

Accepted Answer

The answer of In January of 2017,Brett purchased a Porsche...

Question 9

In July of 2017,Pat acquired a new automobile for $28,000 and used the automobile 80% for business.Pat can take a maximum depreciation deduction in 2017 of

Accepted Answer

A)$11,160 maximum depreciation × .80 = $8,928.(Table 6 in Appendix C)

Question 10

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

B)ADS straight-line must be used for listed property which is not used more than 50% in the trade or business.

Question 11

Jack purchases land which he plans on developing as a golf course.The land costs $20,000,000 and the cost of clearing the land,earthmoving,constructing hazards,bunkers and greens,and installing irrigation systems will cost an additional $6,000,000.What tax issues should Jack consider?

Accepted Answer

The answer of Jack purchases land which he plans on...

Question 12

In April of 2016,Brandon acquired five-year listed property (not an automobile)for $30,000 and used it 70% for business.No election was made regarding Sec.179 and bonus depreciation was not available.In 2017,his business use of the property dropped to 40%.Which of the following statements is true?

Accepted Answer

B)The 2016 depreciation taken was:
 11ea7cb8_54df_a1e9_928c_b3921491c124_TB1258_00 *Must use ADS straight-line because the computer is listed property used 50% or less in trade or business.

Question 13

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

Accepted Answer

C)For personal property,the ADS election applies to all property within a class.

Question 14

In July of 2017,Pat acquired a new automobile for $28,000 and used the automobile 80% for business.In 2018 his business use of the auto was 70%.Pat's depreciation deduction for 2018 will be

Accepted Answer

C)$5,100 maximum depreciation × .70 = $3,570.(Table 6 in Appendix C)

Question 15

In August 2017,Tianshu acquires and places into service 7-year business equipment (tangible personal property qualifying under Sec.179,but not for bonus depreciation)for $70,000.This is the only asset that she purchased during the year; her taxable income from her trade or business is $23,000.She decides to limit her Sec.179 election to the maximum amount currently deductible in her business for the current year.What is her maximum cost recovery (Sec.179 and depreciation)deduction for 2017?

Accepted Answer

The answer of In August 2017,Tianshu acquires and places into...

Question 16

Enrico is a self-employed electrician.In May of the current year,Enrico acquired a used van (5-year property)for $12,000.He used the van 30% for business.The maximum depreciation deduction for the van is

Accepted Answer

A)Because the van is listed property which is not used more than 50% in trade or business,ADS straight-line must be used.Depreciation is $12,000 × .10 × .30 = $360.The property is not eligible for either Sec.179 or bonus depreciation.(Table 11 in Appendix C)

Question 17

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 23,2017.
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 2017?

Accepted Answer

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

Question 18

On January l,Grace leases and places into service an automobile with a FMV of $38,000.The business use of the automobile is 60%.The "inclusion amount" for the initial year of the lease from the IRS tables is $40.The annual lease payments are $8,000.What are the tax consequences of this lease?

Accepted Answer

A)Lease payments of $8,000 × .60 = $4,800 are initially allowed.The inclusion amount is $40 × .60 = $24.$4,800 - $24 = $4,776.

Question 19

Arthur uses a Chevrolet Suburban (GVWR 7,500 pounds)100% for business.He acquired and placed the vehicle in service in his business in January of the current year.The vehicle cost $65,000.The maximum deduction allowed this year is

Accepted Answer

D)The vehicle weighs more than 6,000 GVWR so it is not subject to the auto limitations.The maximum deductions for year 1 include $25,000 Sec.179 expensing and $8,000 MACRS depreciation on the adjusted basis ([$65,000 - 25,000] × 20%).

Question 20

During the year 2017,a calendar-year taxpayer,Marvelous Munchies,a chain of specialty food shops,purchased equipment as follows:
  Assume the property is all 5-year property,but does not qualify for bonus depreciation.What is the maximum depreciation that may be deducted for the assets this year,2017,assuming Sec.179 expensing is not elected?

Accepted Answer

The answer of During the year 2017,a calendar-year taxpayer,Marvelous Munchies,a...

Quiz 26: Depreciation, cost Recovery, amortization, and Depletion

Mehmet,a calendar-year taxpayer,acquires 5-year tangible personal property in 2017 and does not use Sec.179.The property does not qualify for bonus depreciation.Mehmet places the property in service on the following schedule: What is the total depreciation for 2016?

Enrico is a self-employed electrician.In May of the current year,Enrico acquired a used van (5-year property) for $12,000.He used the van 80% for business and 20% for personal purposes.Enrico does not take any Sec.179 deduction.The maximum depreciation deduction for the van is