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Chapter 8: Depreciation, Cost Recovery




Question;chapter 823.;Discuss the implications of an automobile that is used in a;trade or business and has a gross vehicle weight exceeding 6000 pounds.32.Jose' purchased a house for $300,000 in 2011. He used the;house for his personal residence. In March 2011, whenthefairmarket value of the;house was $250,000, he converted the house torental property. What is Jose's;cost recovery for 2014?45.Lori, who is single, purchased five-year class property for;$31,000 and seven-year class property for $42,000 on May 20, 2014. Lori expects;thetaxable incomederived from her business (without regard to the amount;expensed under ? 179) to be about $100,000.Lori wants to elect immediate ? 179 expensing, but she;doesn?t know whichassetshe should expense under ? 179. She elects not to take;additional first-year depreciation.a. Determine Lori?s total deduction if the ? 179 expense is;first taken with respect to the five-year class asset.b. Determine Lori?s total deduction if the ? 179 expense is;first taken with respect to the seven-year class asset.;c. What is your advice to Lori?55.In 2013, Muhammad purchased a new computer for $16,000. The;computer is used 100% for business. Muhammad did not make a ? 179 election with;respect to the computer. He does not claim additional first-year depreciation.;If Muhammad uses the statutory percentage method, determine his cost recovery;deduction for 2013 for computing taxable income and for computing his;alternative minimum tax.;59.Martha was considering starting a new business. During her;preliminary investigations, she incurred the following expenditures;Salaries;$22,000;Travel;18,000;Professional fees;13,000;Interest on a short-term note;4,000;Martha begins the business on;July 1 of the current year.;If Martha elects ? 195 treatment, the startup expenditure deduction for;the current year is="msonormal">="msonormal">="msonormal">="msonormal">="msonormal">


Paper#39702 | Written in 18-Jul-2015

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