Details of this Paper

CHAPTER 8--DEPRECIATION, COST RECOVERY, AMORTIZATION, AND DEPLETION

Description

solution


Question

Question;1. The;concept of depreciation assumes that the asset has a determinable useful;life.;True False;2. The;basis of cost recovery property must be reduced by the cost recovery;allowed.;True False;3. Antiques;may be eligible for cost recovery if they are used in a trade or;business.;True False;4. The;key date for calculating cost recovery is the date the asset is placed in;service.;True False;5. Land;improvements are generally not eligible for cost recovery.;True False;6. 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.;True False;7. The;maximum cost recovery method for all personal property under MACRS is 150%;declining balance.;True False;8. If;150% declining-balance is used, there is no straight-line switchover.;True False;9. All;personal property placed in service in 2012 and used in a trade or business;qualifies for additional first-year depreciation.;True False;10. If;more than 40% of the value of property, other than real property, is placed in;service during the last quarter, all of the property will be allowed 1.5 months;of cost recovery.;True False;11. Under;MACRS, if the mid-quarter convention is applicable, all property sold is;treated as being sold at the mid-point of the quarter in which it is placed in;service.;True False;12. All;eligible real estate under MACRS is permitted one-half month of cost recovery;in the month of disposition.;True False;13. Residential;rental real estate includes property where 80% or more of the net rental;revenues are from nontransient dwelling units.;True False;14. Motel;buildings are classified as residential rental real estate.;True False;15. Taxpayers;may elect to use the straight-line method under MACRS for personalty.;True False;16. Under;the MACRS straight-line election for personalty, the mid-quarter convention is;applicable.;True False;17. The;cost recovery period for new farm equipment placed in service during 2012 is;seven years.;True False;18. In;a farming business, MACRS straight-line cost recovery is required for all fruit;bearing trees.;True False;19. In;a farming business, if the uniform capitalization rules are not used, cost is;recovered using the ADS straight-line method.;True False;20. When;lessor owned leasehold improvements are abandoned because of the termination of;the lease, a loss can be taken for the unrecovered basis.;True False;21. The;costs of qualified leasehold improvements qualify for additional first-year;depreciation.;True False;22. For;personal property placed in service in 2012, the ? 179 maximum deduction is;limited to $139,000.;True False;23. The;? 179 deduction can exceed $139,000 in 2012 if the taxpayer had a ? 179 amount;which exceeded the taxable income limitation in the prior year.;True False;24. Any;? 179 expense amount that is carried forward is subject to the business income;limitation in the carryforward year.;True False;25. Taxable;income for purposes of ? 179 limited expensing is computed by including the;MACRS deduction.;True False;26. The;basis of an asset on which $139,000 has been expensed under ? 179 will be;reduced by $139,000, even if $139,000 cannot be expensed in the current year;because of the taxable income limitation.;True False;27. Property;used for the production of income is not eligible for ? 179;expensing.;True False;28. The;statutory dollar cost recovery limits under ? 280F do not apply to all;automobiles.;True False;29. The;? 179 limit for a sports utility vehicle with a GVW of 7,000 pounds used for;the production of income is $25,000.;True False;30. Once;the more-than-50% business usage test is passed for listed property, it does;matter if the business usage for the property drops to 50% or less during the;recovery period.;True False;31. If;a new car that is used predominantly in business is placed in service in 2012;the statutory dollar cost recovery limit under ? 280F will depend on whether;the taxpayer takes MACRS or straight-line depreciation.;True False;32. If;an automobile is placed in service in 2012, the limitation for cost recovery in;2014 will be based on the cost recovery limits for the year 2012.;True False;33. The;statutory dollar cost recovery limits under ? 280F for passenger automobiles;still apply if mid-quarter cost recovery is used.;True False;34. If;a used $15,000 automobile used 100% for business in the first year (2012) fails;the 50% business usage test in the second year, no cost recovery will be;recaptured.;True False;35. The;inclusion amount for a leased automobile is adjusted by a business usage;percentage.;True False;36. All;listed property is subject to the substantiation requirements of ? 274.;True False;37. If;a taxpayer uses regular MACRS for all property, an alternative minimum tax;adjustment is made with respect to the depreciation on all property, regardless;of the class life.;True False;38. MACRS;depreciation is used to compute earnings and profits.;True False;39. Under;the alternative depreciation system (ADS), the half-year convention must be;used for personalty.;True False;40. A;taxpayer may elect to use the alternative depreciation system (ADS) on property;used predominantly outside the United States.;True False;41. An;election to use straight-line under ADS is made on an asset-by-asset basis for;property other than eligible real estate.;True False;42. For;real property, the ADS convention is the mid-month convention.;True False;43. The;cost of a covenant not to complete for 20 years incurred in connection;with the acquisition of a business is amortized over 20 years.;True False;44. Goodwill;associated with the acquisition of a business cannot be amortized.;True False;45. A;purchased trademark is a ? 197 intangible.;True False;46. If;startup expenses total $53,000 in 2012, $51,000 is amortized over 180;months.;True False;47. The;amortization period in 2012 for $4,000 of startup expenses if no election is;made is 180 months.;True False;48. Cost;depletion is determined by multiplying the depletion cost per unit by the;number of units sold.;True False;49. Percentage;depletion enables the taxpayer to recover more than the cost of an asset.;True False;50. Intangible;drilling costs may be expensed rather than capitalized and written off through;depletion.;True False;51. Grape;Corporation purchased a machine in December of the current year. This was the;only asset purchased during the current year. The machine was placed in service;in January of the following year. No assets were purchased in the following;year. Grape Corporation?s cost recovery would begin;A. In the current year using a mid-quarter convention.;B. In the current year using a half-year convention.;C. In the following year using a mid-quarter convention.;D. In the following year using a half-year convention.;E. None of the above.;52. 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. Stock in the doctor?s LLC.;D. a., b., and c.;E. None of the above.;53. On;June 1 of the current year, Tab converted a machine from personal use to rental;property. At the time of the conversion, the machine was worth $90,000. Five;years ago Tab purchased the machine for $120,000. The machine is still encumbered;by a $50,000 mortgage. What is the basis of the machine for cost;recovery?;A. $70,000.;B. $90,000.;C. $120,000.;D. $140,000.;E. None of the above.;54. Tara;purchased a machine for $40,000 to be used in her business. The cost recovery;allowed and allowable for the three years the machine was used are as follows;Cost Recovery Allowed;Cost Recovery Allowable;Year 1;$16,000;$ 8,000;Year 2;9,600;12,800;Year 3;5,760;7,680;If Tara sells the machine after three years for $15,000, how much gain should;she recognize?;A. $3,480.;B. $6,360.;C. $9,240.;D. $11,480.;E. None of the above.;55. Hazel;purchased a new business asset (five-year asset) on September 30, 2012, at a;cost of $100,000. On October 4, 2012, Hazel placed the asset in;service. This was the only asset Hazel placed in service in 2012.;The only election with respect to the asset was not to take ? 179.;On August 20, 2013, Hazel sold the asset. Determine the cost recovery for;2013 for the asset.;A. $9,600.;B. $11,875.;C. $23,750.;D. $38,000.;E. None of the above.;56. Tan;Company acquires a new machine (ten-year property) on January 15, 2012, at a;cost of $200,000. Tan also acquires another new machine (seven-year property);on November 5, 2012, at a cost of $40,000. No election is made to use the;straight-line method. The company does not make the ? 179 election. Tan;takes additional first-year depreciation. Determine the total deductions in;calculating taxable income related to the machines for 2012.;A. $24,000.;B. $25,716.;C. $102,000.;D. $132,858.;E. None of the above.;57. James;purchased a new business asset (three-year personalty) on July 23, 2012, at a;cost of $40,000. James takes additional first-year depreciation Determine;the cost recovery deduction for 2012.;A. $8,333.;B. $26,666.;C. $33,333.;D. $41,665.;E. None of the above.;58. Alice;purchased office furniture on September 20, 2012, for $100,000. On October 10;she purchased business computers for $80,000. Alice did not elect to expense;any of the assets under ? 179, nor did she elect straight-line cost;recovery. She did not take additional first-year depreciation.;Determine the cost recovery deduction for the business assets for 2012.;A. $6,426.;B. $14,710.;C. $25,722.;D. $30,290.;E. None of the above.;59. Barry;purchased a used business asset (seven-year property) on September 30, 2012, at;a cost of $200,000. This is the only asset he purchased during the year. Barry;did not elect to expense any of the asset under ? 179, nor did he elect;straight-line cost recovery. Barry sold the asset on July 17, 2013. Determine;the cost recovery deduction for 2013.;A. $19,133.;B. $24,490.;C. $34,438.;D. $55,100.;E. None of the above.;60. Bonnie;purchased a new business asset (five-year property) on March 10, 2012, at a;cost of $30,000. She also purchased a new business asset (seven-year property);on November 20, 2012, at a cost of $13,000. Bonnie did not elect to expense;either of the assets under ? 179, nor did she elect straight-line cost;recovery. Bonnies takes additional first-year depreciation.;Determine the cost recovery deduction for 2012 for these assets.;A. $5,858.;B. $7,464.;C. $9,586.;D. $19,429.;E. None of the above.;61. Doug;purchased a new factory building on January 15, 1988, for $400,000. On March 1;2012, the building was sold. Determine the cost recovery deduction for the year;of the sale assuming he did not use the MACRS straight-line method.;A. $0.;B. $1,587.;C. $2,645.;D. $12,696.;E. None of the above.;62. Cora;purchased a hotel building on May 17, 2012, for $3,000,000. Determine the cost;recovery deduction for 2013.;A. $48,150.;B. $59,520.;C. $69,000.;D. $76,920.;E. None of the above.;63. Carlos;purchased an apartment building on November 16, 2012, for $3,000,000. Determine;the cost recovery for 2012.;A. $9,630.;B. $11,910.;C. $13,950.;D. $22,740.;E. None of the above.;64. Diane;purchased a factory building on November 15, 1993, for $5,000,000. She sells;the factory building on February 2, 2012. Determine the cost recovery deduction;for the year of the sale.;A. $16,025.;B. $19,844.;C. $26,458.;D. $158,750.;E. None of the above.;65. Howard?s;business is raising and harvesting peaches. On March 10, 2012, Howard purchased;10,000 new peach trees at a cost of $60,000. Howard does not elect to expense;assets under ? 179. If eligible, Howard takes additional first-year;depreciation. Determine the cost recovery deduction for 2012.;A. $0.;B. $3,000.;C. $31,500.;D. $60,000.;E. None of the above.;66. On;May 15, 2012, Brent purchased new farm equipment for $120,000. Brent used the;equipment in connection with his farming business. Brent does not elect;to expense assets under ? 179. Brent does not take additional;first-year depreciation. Determine the cost recovery deduction for 2012.;A. $12,852.;B. $18,000.;C. $24,000.;D. $30,000.;E. None of the above.;67. On;June 1, 2012, Sam purchased new 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. Sam does;not take additional first-year depreciation. Determine the cost recovery;deduction for 2012.;A. $5,000.;B. $7,500.;C. $10,000.;D. $12,500.;E. None of the above.;68. On;May 30, 2012, Jane signed a 20-year lease on a factory building to use for her;business. The lease begins on June 1, 2012. In August 2012, Jane;paid $300,000 for qualified leasehold improvements to the building. Jane;takes additional first-year depreciation. Determine Jane?s total;deduction with respect to the leasehold improvements for 2012.;A. $2,890.;B. $150,000.;C. $151,445.;D. $300,000.;E. None of the above.;69. On;February 20, 2012, Susan paid $200,000 for a qualified leasehold improvement to;an office building that she is going to lease to John. The lease will begin on;June 1, 2012, and terminate on May 31, 2022. At the termination of the lease;the improvement will be worthless. Susan did not elect to treat the leasehold;improvement property as ? 179 property. She does not take additional first-year;depreciation. Determine Susan?s deductible loss as a result of the;termination of the lease.;A. $0.;B. $123,503.;C. $127,990.;D. $128,631.;E. None of the above.;70. White;Company acquires a new machine (seven-year property) on January 10, 2012, at a;cost of $600,000. White makes the election to expense the maximum amount under;179. No election is made to use the straight-line method. White does take;additional first-year depreciation. Determine the total deductions in;calculating taxable income related to the machine for 2012 assuming White has;taxable income of $800,000.;A. $71,593.;B. $128,610.;C. $204,877.;D. $385,296.;E. None of the above.;71. Augie;purchased one new asset during the year (five-year property) on November 10;2012, at a cost of $450,000. She made the ? 179 election. The income from;the business before the cost recovery deduction and the ? 179 deduction was $310,000.;She takes additional first-year depreciation. Determine the total cost;recovery deduction with respect to the asset for 2012.;A. $22,500.;B. $154,550.;C. $302,275.;D. $310,000.;E. None of the above.;72. In;2011, Gail had a ? 179 deduction carryover of $25,000. In 2012, she elected;179 for an asset acquired at a cost of $115,000. Gail?s ? 179 business income;limitation for 2012 is $142,000. Determine Gail?s ? 179 deduction for;2012.;A. $25,000.;B. $115,000.;C. $130,000.;D. $140,000.;E. None of the above.;73. The;only asset Bill purchased during 2012 was a new seven-year class asset. The;asset, which was listed property, was acquired on June 17 at a cost of $50,000.;The asset was used 40% for business, 30% for the production of income, and the rest;of the time for personal use. Bill always elects to expense the maximum amount;under ? 179 whenever it is applicable. The net income from the business before;the ? 179 deduction is $100,000. Determine Bill?s maximum deduction with;respect to the property for 2012.;A. $1,428.;B. $2,499.;C. $26,749.;D. $33,375.;E. None of the above.;74. Mary;purchased a new five-year class asset on March 7, 2012. The asset was listed;property (not an automobile). It was used 60% for business and the rest of the;time for personal use. The asset cost $600,000. Mary made the ? 179 election.;The income from the business before the ? 179 deduction was $400,000. Mary does;take additional first-year depreciation. Determine the total deductions;with respect to the asset for 2012.;A. $72,000.;B. $250,000.;C. $272,000.;D. $360,000.;E. None of the above.;75. Hans;purchased a new passenger automobile on August 17, 2012, for $30,000. During;the year the car was used 40% for business and 60% for personal use. Determine;his cost recovery deduction for the car for 2012.;A. $500.;B. $1,000.;C. $1,224.;D. $1,500.;E. None of the above.;76. On;June 1, 2012, Irene places in service a new automobile that cost $21,000. The;car is used 70% for business and 30% for personal use. (Assume this percentage;is maintained for the life of the car.) She does not take additional;first-year depreciation. Determine the cost recovery deduction for 2013.;A. $3,060.;B. $3,290.;C. $3,430.;D. $6,720.;E. None of the above.;77. On;June 1, 2012, James places in service a new automobile that cost $40,000. The;car is used 60% for business and 40% for personal use. (Assume this percentage;is maintained for the life of the car.) James does take additional;first-year depreciation. Determine the cost recovery deduction for 2012.;A. $1,776.;B. $1,836.;C. $6,636.;D. $8,000.;E. None of the above.;78. On;May 2, 2012, Karen placed in service a new sports utility vehicle that cost;$60,000 and has a gross vehicle weight of 6,300 lbs. The vehicle is used;60% for business and 40% for personal use. Determine the cost recovery;for 2012. Karen wants to maximize her deductions.;A. $2,200.;B. $3,060.;C. $25,000.;D. $27,200.;E. None of the above.;79. On;July 17, 2012, Kevin places in service a used automobile that cost $25,000. The;car is used 80% for business and 20% for personal use. In 2013, he used the;automobile 40% for business and 60% for personal use. Determine the cost;recovery recapture for 2013.;A. $0.;B. $448.;C. $2,000.;D. $2,500.;E. None of the above.;80. Janet;purchased a new car on June 5, 2012, at a cost of $20,000. She used the car 80%;for business and 20% for personal use in 2012. She used the automobile 40% for;business and 60% for personal use in 2013. Janet takes additional;first-year depreciation. Determine Janet?s cost recovery recapture for;2013.;A. $0.;B. $928.;C. $1,008.;D. $7,408.;E. None of the above.;81. On;July 10, 2012, Ariff places in service a new sports utility vehicle that cost;$70,000 and weighed 6,300 pounds. The SUV is used 100% for business. Determine;Ariff?s maximum deduction for 2012, assuming Ariff?s ? 179 business income is;$110,000. Ariff does not take additional first-year depreciation.;A. $2,960.;B. $25,000.;C. $34,000.;D. $70,000.;E. None of the above.;82. On;March 1, 2012, Lana leases and places in service a passenger automobile. The;lease will run for five years and the payments are $500 per month. During 2012;she uses her car 40% for business and 60% for personal activities. Assuming the;dollar amount from the IRS table is $110, determine Lana?s deduction for the;lease payments.;A. $0.;B. $1,800.;C. $2,000.;D. $2,330.;E. None of the above.;83. On;June 1, 2012, 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.;A. $0.;B. $241.;C. $907.;D. $1,687.;E. None of the above.;84. Bhaskar;purchased a new factory building on September 2, 2012, for $2,000,000. He;elected the alternative depreciation system (ADS). Determine the cost recovery;deduction for 2013.;A. $15,000.;B. $18,000.;C. $22,000.;D. $50,000.;E. None of the above.;85. Pat;purchased a used five-year class asset on March 15, 2012, for $60,000. He did;not elect ? 179 expensing. Determine the cost recovery deduction for 2012 for;earnings and profits purposes.;A. $2,000.;B. $3,000.;C. $6,000.;D. $12,000.;E. None of the above.;86. George;purchases used seven-year class property at a cost of $200,000 on April 20;2012. Determine George?s cost recovery deduction for 2012 for alternative;minimum tax purposes, assuming George does not elect ? 179.;A. $2,500.;B. $10,000.;C. $14,280.;D. $28,580.;E. None of the above.;87. During;the past two years, through extensive advertising and improved customer;relations, Orange Corporation estimated that it had developed customer goodwill;worth $500,000. For the current year, determine the amount of goodwill Orange;Corporation may amortize.;A. $16,667.;B. $26,667.;C. $33,333.;D. $100,000.;E. None of the above.;88. On;June 1, 2012, 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 2012 for the patent.;A. $0.;B. $1,667.;C. $11,667.;D. $35,000.;E. None of the above.;89. Orange;Corporation begins business on April 2, 2012. The corporation has startup;expenditures of $54,000. If Orange Corporation elects ? 195, determine the;total amount that Orange may deduct in 2012.;A. $1,000.;B. $2,650.;C. $3,650.;D. $5,000.;E. None of the above.;90. On;January 15, 2012, Vern purchased the rights to a mineral interest for;$3,500,000. At that time it was estimated that the recoverable units would be;500,000. During the year, 40,000 units were mined and 25,000 units were sold;for $800,000. Vern incurred expenses during 2012 of $500,000. The percentage;depletion rate is 22%. Determine Vern?s depletion deduction for 2012.;A. $150,000.;B. $175,000.;C. $176,000.;D. $200,000.;E. $250,000.;91. Tom;acquired a used five-year class asset on November 5, 2012 for $20,000.;This was the only asset Tom acquired in 2012. He placed the asset in;service on January 20, 2013. However, because the asset was purchased in;2012, Tom deducted regular MACRS cost recovery on the asset for the year 2012.;He did not elect to expense any of the asset under ? 179. In 2013, Tom;purchased no assets and because he had no taxable income, he did not deduct any;cost recovery. In 2014, Tom sold the five-year asset on September;25th. Determine the basis of the five-year asset at the time of the;sale.;92. Jim;acquires a new seven-year class asset on September 20, 2012, for $80,000.;He placed the asset in service on October 5, 2012. He does not elect to expense;any of the asset under ? 179 or elect straight-line, cost recovery.;He takes additional first-year depreciation. He sells the asset on August 25;2013. This is the only asset he acquires in 2012. Determine Jim?s cost;recovery in 2012 and 2013.;93. Rod;paid $950,000 for a new warehouse on April 14, 2012. He sold the warehouse on;September 29, 2017. Determine the cost recovery deduction for 2012 and;2017.;94. On;March 3, 2012, Sally purchased and placed in service a building costing $12,000,000.;The building has 10 floors. The bottom three floors are rented out to;businesses. The top seven floors are residential apartments. The;gross rents from the businesses are $60,000 and the gross rents from the;apartments are $110,000. Determine Sally?s cost recovery for the building;in 2012.;95. Sid;bought a new $410,000 seven-year class asset on August 2, 2012. On December 2;2012, he purchased $160,000 of used five-year class assets. Sid does take;additional first-year depreciation if available. If Sid elects ? 179, what is;the maximum write-off for these purchases for 2012?;96. Polly;purchased a new hotel on July 20, 2012, for $6,000,000. On January 20, 2019;the building was sold. Determine the cost recovery deduction for the year of;the sale.;97. Rustin;bought used 7-year class property on May 15, 2012, for $370,000. Rustin elects ? 179;and straight-line cost recovery. Rustin?s taxable income would not create a;limitation for purposes of the ? 179 deduction. Rustin does not take;additional first-year depreciation. Determine the write-off Rustin can take in;2012.;98. Audra;acquires the following new five-year class property in 2012;Asset;Acquisition Date;Cost;A;January 10;$106,000;B;July 5;70,000;C;November 15;450,000;Total;$626,000;Audra elects ? 179 for Asset C. Audra?s taxable income from her business would;not create a limitation for purposes of the ? 179 deduction. Audra takes;additional first-year depreciation. Determine her total cost recovery deduction;(including the ? 179 deduction) for the year.;99. On;April 5, 2012, Orange Corporation purchased, and placed in service, seven-year;class assets costing $500,000 and five-year class assets costing;$140,000. Orange elects to expense the maximum amount under ? 179.;Orange does not take additional first-year depreciation. Assume taxable;income is not a limitation. Determine Orange Corporation?s cost recovery;with respect to the assets for 2012.;100. On;February 15, 2012, Martin signed a 20-year lease on a commercial;building. In March 2012, Martin purchased and placed in service new;seven-year class assets costing $400,000. In June 2012, Martin paid;$200,000 for qualified leasehold real property improvements. Martin;desires to take the maximum cost recovery deduction with respect to the assets;in 2012. He takes additional first-year depreciation. Assuming;taxable income is not a limitation, determine Martin?s maximum cost recovery;for 2012.;101. On;February 21, 2012, Joe purchased new farm equipment for $600,000. Joe has;made an election to not have the uniform capitalization rules apply to his;farming business. He does not take additional first-year depreciation. If;Joe elects ? 179, what is the maximum write-off for this purchase for;2012?;102. On;April 15, 2012, Sam placed in service a storage facility (a single-purpose;agricultural structure) costing $80,000. Sam also purchased and planted;fruit trees costing $40,000. Sam does not elect to expense any of the;acquisitions under ? 179. Sam elected not to take additional first-year;depreciation. Determine Sam?s cost recovery from these two items for;2012.;103. On;August 20, 2011, May signed a 10-year lease on a building for her business. On;November 28, 2012, May paid $80,000 for a qualified leasehold improvement to;the building. She takes additional first-year depreciation. What is May?s cost;recovery deduction for the improvement in 2012?;104. On;July 15, 2012, Mavis paid $275,000 for exterior leasehold improvements on a;commercial building she was leasing. Determine the total cost recovery;from the improvements in 2012. Mavis elected not to take additional;first-year depreciation.;105. Joe;purchased a new five-year class asset on June 1, 2012. The asset is listed;property (not an automobile). It was used 55% for business and 45% for the;production of income. The asset cost $1,000,000. Joe made the ? 179 election.;Joe?s taxable income would not create a limitation for purposes of the ? 179;deduction. Joe does not take additional first-year depreciation.;Determine Joe?s total cost recovery (including the ? 179 deduction) for the year.;106. Nora;purchased a new automobile on July 20, 2012, for $29,000. The car was used 60%;for business and 40% for personal use. In 2013, the car was used 30% for;business and 70% for personal use. Nora elects not to take additional;first-year depreciation. Determine the cost recovery recapture and the;cost recovery deduction for 2013.;107. Norm;purchases a new sports utility vehicle (SUV) on October 12, 2012, for $50,000.;The SUV has a gross vehicle weight of 6,200 lbs. It is used 100% of the time;for business and it is the only business asset acquired by Norm during 2012.;Compute the maximum deduction with respect to the SUV for 2012. Norm does;take additional first-year depreciation.;108. On;June 1, 2012, Gabriella purchased a computer and peripheral equipment;(five-year property) for $25,000. She used the assets 40% for business, 50% for;the production of income, and 10% for personal use. These are the only assets;Gabriella purchased during the current year. Determine her total cost recovery;deduction for the current year.;109. In;2012, Marci is considering starting a new business. Marci had the;following costs associated with this venture;Advertising;$ 5,000;Travel;10,000;Market surveys;8,000;Professional services;30,000;Interest expense;2,000;Taxes;1,000;Marci started the new business on October 1, 2012. Determine the;deduction for Marci?s startup costs for 2012.;110. Rick;purchased a uranium interest for $10,000,000 on January 3, 2012, when;recoverable reserves were estimated at 200,000 units. A total of 10,000 units;were extracted in 2012 and 7,000 units were sold in 2012. Gross income from the;property was $2,800,000 and taxable income without the allowance for depletion;was $1,000,000. Determine the depletion deduction for 2012.;111. Discuss;the difference between the half-year convention and the mid-quarter;convention.;112. 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 2012.;113. Discuss;the effect on the cost recovery method of a taxpayer election if the;uniform capitalization rules apply to a farming business.;114. Discuss;the tax consequences of listed property being used for the production of income;compared to being used in a trade or business.;115. Discuss;the beneficial tax consequences of an SUV notbeing classified as a;passenger automobile.;116. Discuss;the reason for the inclusion amount with respect to leased automobiles.;117. Discuss;the requirements in order for startup expenditures to be amortized under;195.

 

Paper#39343 | Written in 18-Jul-2015

Price : $27
SiteLock