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Question;1.Property which is classified as personalty may be depreciated.True False2.The basis of cost recovery property must be reduced by at least the cost recovery allowable.True False3.Antiques may be eligible for cost recovery if they are used in a trade or business.True False4.The key date for calculating cost recovery is the date the asset is placed in service.True False5.Land improvements are generally not eligible for cost recovery.True False6.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 False7.The maximum cost recovery method for all personal property under MACRS is 150% declining balance.True False8.The cost recovery period for 3-year class property is 4 years.True False9.All personal property placed in service in 2013 and used in a trade or business qualifies for additional first-year depreciation.True False10.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 placed in service in the second quarter will be allowed 7.5 months of cost recovery.True False11.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 False12.The factor for determining the cost recovery for eligible real estate under MACRS, in the year of disposition, is taken from the month of the disposition.True False13.Residential rental real estate includes property where 80% or more of the net rental revenues are from nontransient dwelling units.True False14.Motel buildings have a cost recovery period of 27.5 years.True False15.Taxpayers may elect to use the straight-line method under MACRS for personalty.True False16.Under the MACRS straight-line election for personalty, only the half-year convention is applicable.True False17.The cost recovery method for new farm equipment placed in service during 2013 is 200% declining balance.True False18.In a farming business, MACRS straight-line cost recovery is required for all fruit bearing trees.True False19.In a farming business, if the uniform capitalization rules are not used, cost is recovered using the ADS straight-line method.True False20.When lessor owned leasehold improvements are abandoned because of the termination of the lease, a loss can be taken for the unrecovered basis.True False21.The costs of qualified leasehold improvements qualify for additional first-year depreciation.True False22.For personal property placed in service in 2013, the ? 179 maximum deduction is limited to $500,000.True False23.The ? 179 deduction can exceed $500,000 in 2013 if the taxpayer had a ? 179 amount which exceeded the taxable income limitation in the prior year.True False24.Any ? 179 expense amount that is carried forward is subject to the business income limitation in the carryforward year.True False25.Taxable income for purposes of ? 179 limited expensing is computed by including the MACRS deduction.True False26.The basis of an asset on which $500,000 has been expensed under ? 179 will be reduced by $500,000, even if $500,000 cannot be expensed in the current year because of the taxable income limitation.True False27.Property used for the production of income is not eligible for ? 179 expensing.True False28.The statutory dollar cost recovery limits under ? 280F does apply to all automobiles.True False29.The ? 179 limit for a sports utility vehicle with a GVW of 7,000 pounds will not apply if the sports utility vehicle is used as a taxi.True False30.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 False31.If a new car that is used predominantly in business is placed in service in 2013, the statutory dollar cost recovery limit under ? 280F will depend on whether the taxpayer takes MACRS or straight-line depreciation.True False32.If an automobile is placed in service in 2013, the limitation for cost recovery in 2015 will be based on the cost recovery limits for the year 2013.True False33.The statutory dollar cost recovery limits under ? 280F for passenger automobiles are changed if mid-quarter cost recovery is used.True False34.If a used $35,000 automobile used 100% for business in the first year (2013) fails the 50% business usage test in the second year, no cost recovery will be recaptured.True False35.The inclusion amount for a leased automobile is adjusted by a business usage percentage.True False36.All listed property is subject to the substantiation requirements of ? 274.True False37.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 False38.MACRS depreciation is used to compute earnings and profits.True False39.Under the alternative depreciation system (ADS), the half-year convention must be used for personalty.True False40.A taxpayer may elect to use the alternative depreciation system (ADS) to compute depreciation for earnings and profits.True False41.An election to use straight-line under ADS is made on an asset-by-asset basis for property other than eligible real estate.True False42.For real property, the ADS convention is the mid-month convention.True False43.The cost of a covenant not to compete for 10 years incurred in connection with the acquisition of a business is amortized over 10 years.True False44.Goodwill associated with the acquisition of a business cannot be amortized.True False45.A purchased trademark is a ? 197 intangible.True False46.If startup expenses total $53,000 in 2013, $51,000 is amortized over 180 months.True False47.The amortization period in 2013 for $58,000 of startup expenses is 180 months.True False48.Cost depletion is determined by multiplying the depletion cost per unit by the number of units sold.True False49.Percentage depletion enables the taxpayer to recover more than the cost of an asset.True False


Paper#41164 | Written in 18-Jul-2015

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