Question 1

A purchaser of the assets of a business must allocate the purchase price to the individual assets in accordance with the written agreement between the purchaser and the seller.Which of the following assets would be least preferred for purposes of allocating value from the purchaser point of view?

Accepted Answer

C) The office building will have a 39-year recovery life. Allocated costs will be recovered more quickly with the other assets.

Question 2

Maria,a sole proprietor,has several items of office furniture and equipment which are depreciable.All were acquired before this year.She is not required to report her depreciation deduction on Form 4562.

Accepted Answer

Form 4562 is not required if no additions are placed in service this year. The depreciation total can be entered directly on her Schedule C.

Question 3

Kenrick is an employee of the Theta Corp.sales department.He uses his automobile 75% for making sales calls.He can deduct depreciation on his auto by reporting on Form 4562 (Depreciation and Amortization).

Accepted Answer

As an employee, he will report the auto depreciation on Form 2106.

Question 4

The client is a corporation which uses high-tech equipment to manufacture its product.Because of the high level of wear and tear due to long production runs and frequent technology changes,the client usually replaces the equipment every two years.According to IRS guidance,the MACRS life of the equipment is five years.In order to accelerate depreciation deductions,which tax depreciation option should the client elect?

Accepted Answer

D) Under Sec. 168(f), taxpayers may exclude property from the MACRS system if the property is depreciated under the units-of-production method or any other method not expressed in terms of years.

Question 5

Discuss the options available regarding treatment of an amount paid in excess of the FMV of an acquired company's net assets in a business combination.

Accepted Answer

The answer of Discuss the options available regarding treatment of...

Question 6

Why would a taxpayer elect to use the alternative depreciation system rather than the MACRS rules?

Accepted Answer

The answer of Why would a taxpayer elect to use...

Quiz 10: Depreciation, cost Recovery, amortization, and Depletion

A purchaser of the assets of a business must allocate the purchase price to the individual assets in accordance with the written agreement between the purchaser and the seller.Which of the following assets would be least preferred for purposes of allocating value from the purchaser point of view?

Maria,a sole proprietor,has several items of office furniture and equipment which are depreciable.All were acquired before this year.She is not required to report her depreciation deduction on Form 4562.

Kenrick is an employee of the Theta Corp.sales department.He uses his automobile 75% for making sales calls.He can deduct depreciation on his auto by reporting on Form 4562 (Depreciation and Amortization).

Discuss the options available regarding treatment of an amount paid in excess of the FMV of an acquired company's net assets in a business combination.

Why would a taxpayer elect to use the alternative depreciation system rather than the MACRS rules?