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5. Jacqueline Corporation acquired new office furn...




5. Jacqueline Corporation acquired new office furniture on July 13, 2013, for $80,000. Jacqueline did not elect immediate expensing under Section 179. Jacqueline also elects not to take the additional first-year depreciation. Determine Jacqueline?s cost recovery for 2013. a. $80,000 b. $11,432 c. $8,000 d. $0 46. On August 5, 2013, Pavlina purchased a new office building for $2 million. On October 3, 2013, she began to rent out office space in the building. What is Pavlina?s cost recovery for 2013? a. $0 b. $10,700 c. $51,282 d. $2,000,000 47. Assume the same facts as in the previous problem. Assume further that Pavlina sells the office building on July 12, 2017. What is Pavlina?s cost recovery for 2017? a. $51,282 b. $27,777 c. $10,700 d. $0In March 2013, Dave, a calendar-year taxpayer, purchased new 7-year property for $1,000,000. The property was immediately placed into service (and is being used exclusively in Dave?s extremely profitable business). No other personal property will be purchased by Dave in 2013. Dave wants to take the largest possible tax deduction in 2013 relating to the equipment. Compute the largest tax deduction possible in 2013 for the equipment (consider the Section 179 election, Bonus Depreciation, and MACRS, if applicable): a. $1,000,000 b. $ 785,725 c. $500,000 d. $139,000 37. In 2007, John (a single taxpayer) loaned $10,000 to his friend Gregory. In 2013, Gregory declared bankruptcy, with the result that the debt became totally worthless. How should John treat the loss relating to this debt (assume that the debt is a nonbusiness debt that is a bona fide debt that arose from a debtor-creditor relationship)? a. John may not take any deduction relating to the debt (it is a nonbusiness debt) b. As a short-term capital loss c. As a long-term capital loss d. As an itemized deduction38. Assume the facts stated in the prior question. Assume further that John has no other capital gains or losses in 2013 (or any prior years). What is the maximum amount (related to the bad debt) that John can deduct in 2013? a. $10,000 b. $7,000 c. $3,000 d. $0 39. Assume the facts stated in the prior two questions. Assume further that for 2013 John will offset his wages (with any deduction related to the debt) to the maximum extent permitted by law. What is the amount of John?s capital loss carryover to 2014? a. $10,000 b. $7,000 c. $3,000 d. $0


Paper#5125 | Written in 18-Jul-2015

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