Question 1

Bonnie Jo used two assets during the current year.The first was computer equipment with an original basis of $15,000,currently in the second year of depreciation and depreciated under the half-year convention.This asset was disposed of on October 1st of the current year.The second was furniture with an original basis of $24,000,placed in service during the first quarter,currently in the fourth year of depreciation,and depreciated under the mid-quarter convention.What is Bonnie Jo's depreciation deduction for the current year? (Round final answer to the nearest whole number.)(Use MACRS Table 1 and Table 2.)

Accepted Answer

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Question 2

Janey purchased machinery on April 8^th of the current year.The relevant costs for the year are as follows: machinery for $10,000,$800 shipping,$50 for delivery insurance,$500 for installation,$750 for sales tax,$150 for the annual tune-up,and $200 of property taxes (an annual tax on business property).What is Janey's tax basis for the machinery?

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Question 3

Timothy purchased a new computer for his consulting practice on October 15^th of the current year.The basis of the computer was $4,000.During the Thanksgiving holiday,he decided the computer didn't meet his business needs and gave it to his college-aged son in another state.The computer was never used for business purposes again.Timothy had $50,000 of taxable income before depreciation.What is Timothy's total cost recovery deduction with respect to the computer during the current year?

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Question 4

Amit purchased two assets during the current year.On April 16th Amit placed in service computer equipment (five-year property)with a basis of $5,000 and on September 9th placed in service furniture (seven-year property)with a basis of $20,000.Calculate the maximum depreciation deduction (ignoring §179 and bonus depreciation).(Use MACRS Table 1.)

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Question 5

Olney LLC only purchased one asset this year.Olney LLC placed in service on July 19,2019,machinery and equipment (seven-year property)with a basis of $1,330,000.Assume that Olney has sufficient income to avoid any limitations.Calculate the maximum depreciation deduction,including §179 expensing (but ignoring bonus depreciation).(Use MACRS Table 1.)(Round final answer to the nearest whole number.)

Accepted Answer

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Question 6

Jaussi purchased a computer several years ago for $2,200 and used it for personal purposes.On November 10^th of the current year,when the fair market value of the computer was $800,Jaussi converted it to business use.What is Jaussi's tax basis for the computer?

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Question 7

Roth LLC purchased only one asset during the current year.On August 1st Roth placed in service office equipment (seven-year property)with a basis of $42,500.Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation).(Use MACRS Half-Year Convention Table.)(Round final answer to the nearest whole number.)

Accepted Answer

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Question 8

Kristine sold two assets on March 20th of the current year.The first was machinery with an original basis of $51,000,currently in the fourth year of depreciation,and depreciated under the half-year convention.The second was furniture with an original basis of $16,000,placed in service during the fourth quarter,currently in the third year of depreciation,and depreciated under the mid-quarter convention.What is Kristine's depreciation deduction for the current year if the depreciation recovery period is seven years? (Use MACRS Table 1 and Table 2 and Exhibit 10-6.)(Round final answer to the nearest whole number.)

Accepted Answer

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Question 9

Phyllis purchased $8,000 of specialized audio equipment that she uses in her business regularly.Occasionally,she uses the equipment for personal use.During the first year,Phyllis used the equipment for business use 70 percent of the time; however,during the current (second)year,the business use fell to 40 percent.Assume that the equipment is seven-year MACRS property and is under the half-year convention.Assume the ADS recovery period is 10 years.What is the depreciation allowance for the current year? (Use MACRS Table 1.)(Round final answer to the nearest whole number.)

Accepted Answer

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Question 10

Northern LLC only purchased one asset this year.In 2019,Northern LLC placed in service on September 6^th machinery and equipment (seven-year property)with a basis of $3,150,000.Assume that Northern has sufficient income to avoid any limitations.Calculate the maximum depreciation expense including §179 expensing (ignore any potential bonus expensing).(Use MACRS Table 1.)(Round final answer to the nearest whole number.)

Accepted Answer

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Question 11

Santa Fe purchased the rights to extract turquoise on a tract of land over a five-year period.Santa Fe paid $300,000 for extraction rights.A geologist estimated that Santa Fe will recover 5,000 pounds of turquoise.During the past several years,4,000 pounds were extracted.During the current year,Santa Fe extracted 1,500 pounds of turquoise,which it sold for $250,000.What is Santa Fe's cost depletion deduction for the current year?
A)$60,000.
B)$90,000.
C)$190,000.
D)$160,000.
E)None of the choices are correct.

Accepted Answer

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Question 12

An office building was purchased several years ago on December 9th for $2,500,000.The purchase price was allocated as follows: building $1,900,000,landscaping $100,000,and land $500,000.During the current year,the 10^th year,the building was sold on March 10^th.Calculate the maximum depreciation deduction for the real property during the current year,rounded to the nearest whole number.(Use MACRS Table 5.)

Accepted Answer

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Question 13

Reid acquired two assets in 2019: on August 6th he acquired computer equipment (five-year property)with a basis of $1,020,000 and on November 9th he acquired machinery (seven-year property)with a basis of $1,020,000.Assume that Reid has sufficient income to avoid any limitations.Calculate the maximum depreciation deduction,including §179 expensing (but not bonus depreciation).(Use MACRS Table 1.)

Accepted Answer

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Question 14

Yasmin purchased two assets during the current year.On May 26th Yasmin placed in service computer equipment (five-year property)with a basis of $10,000 and on December 9th placed in service machinery (seven-year property)with a basis of $10,000.Calculate the maximum depreciation deduction (ignoring §179 and bonus depreciation).(Use MACRS Table 2.)

Accepted Answer

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Question 15

Lucky Strike Mine (LLC)purchased a silver deposit for $1,500,000.It estimated it would extract 500,000 ounces of silver from the deposit.Lucky Strike mined the silver and sold it,reporting gross receipts of $1.8 million,$2.5 million,and $2 million for Years 1 through 3,respectively.During Years 1 through 3,Lucky Strike reported net income (loss)from the silver deposit activity in the amount of ($100,000),$400,000,and $100,000,respectively.In Years 1 through 3,Lucky Strike actually extracted 300,000 ounces of silver as follows:  What is Lucky Strike's depletion deduction for Year 2 if the applicable percentage depletion for silver is 15 percent?
A)$200,000.
B)$375,000.
C)$400,000.
D)$450,000.
E)None of the choices are correct.

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Question 16

Flax LLC purchased only one asset this year.On January 16 Flax placed in service a computer (five-year property)with a basis of $14,000.Calculate the maximum depreciation deduction (ignoring §179 and bonus depreciation).(Use MACRS Table 1.)

Accepted Answer

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Question 17

During August of the prior year,Julio purchased an apartment building that he used as a rental property.The basis was $1,400,000.Calculate the maximum depreciation deduction during the current year.(Use MACRS Table 3.)

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Question 18

Eddie purchased only one asset during the current year.On May 1st Eddie placed in service furniture (seven-year property)with a basis of $26,500.Calculate the maximum depreciation deduction,rounded to the nearest whole number (ignoring §179 and bonus depreciation).(Use MACRS Table 1.)

Accepted Answer

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Question 19

Columbia LLC only purchased one asset this year.Columbia LLC placed in service on July 9,2019,machinery and equipment (seven-year property)with a basis of $2,750,000.Assume that Columbia has sufficient income to avoid any limitations.Calculate the maximum depreciation deduction,including §179 expensing (but ignoring bonus depreciation)for the year.(Use MACRS Table 2.)(Round final answer to the nearest whole number.)

Accepted Answer

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Question 20

During April of the current year,Ronen purchased a warehouse that he used for business purposes.The basis was $1,600,000.Calculate the maximum depreciation deduction during the current year.(Use MACRS Table 5.)

Accepted Answer

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Quiz 10: Property Acquisition and Cost Recovery

Jaussi purchased a computer several years ago for $2,200 and used it for personal purposes.On November 10th of the current year,when the fair market value of the computer was $800,Jaussi converted it to business use.What is Jaussi's tax basis for the computer?

Flax LLC purchased only one asset this year.On January 16 Flax placed in service a computer (five-year property)with a basis of $14,000.Calculate the maximum depreciation deduction (ignoring §179 and bonus depreciation).(Use MACRS Table 1.)

During August of the prior year,Julio purchased an apartment building that he used as a rental property.The basis was $1,400,000.Calculate the maximum depreciation deduction during the current year.(Use MACRS Table 3.)

Eddie purchased only one asset during the current year.On May 1st Eddie placed in service furniture (seven-year property)with a basis of $26,500.Calculate the maximum depreciation deduction,rounded to the nearest whole number (ignoring §179 and bonus depreciation).(Use MACRS Table 1.)

During April of the current year,Ronen purchased a warehouse that he used for business purposes.The basis was $1,600,000.Calculate the maximum depreciation deduction during the current year.(Use MACRS Table 5.)

Jaussi purchased a computer several years ago for $2,200 and used it for personal purposes.On November 10^th of the current year,when the fair market value of the computer was $800,Jaussi converted it to business use.What is Jaussi's tax basis for the computer?