Question 1

On June 1,2011,Gabriella purchased a computer and peripheral equipment (five-year property)for $25,000.She used the assets 40% for business,50% for the production of income,and 10% for personal use.These are the only assets Gabriella purchased during the current year.Determine her total cost recovery deduction for the current year.

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Question 2

Discuss the reason for the inclusion amount with respect to leased automobiles.

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Question 3

On July 15,2011,Mavis paid $275,000 for qualified leasehold improvements on a commercial building she was leasing.If Mavis elects to treat the qualified leasehold improvements as § 179 property,determine the total cost recovery from the improvements in 2011.Mavis elected not to take additional first-year depreciation.

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Question 4

Norm purchases a new sports utility vehicle (SUV)on October 12,2011,for $50,000.The SUV has a gross vehicle weight of 6,200 lbs.It is used 100% of the time for business and it is the only business asset acquired by Norm during 2011.Compute the maximum deduction with respect to the SUV for 2011.Norm elects not to take additional first-year depreciation.

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Question 5

Discuss the criteria used to determine whether a building is residential or nonresidential realty.Also explain the tax consequences resulting from this determination if the property is placed in service in 2011.

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Question 6

Discuss the tax consequences of listed property being used for the production of income compared to being used in a trade or business.

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Question 7

Joe purchased a new five-year class asset on June 1,2011.The asset is listed property (not an automobile).It was used 55% for business and 45% for the production of income.The asset cost $1,000,000.Joe made the § 179 election.Joe's taxable income would not create a limitation for purposes of the § 179 deduction.Joe elects not to take additional first-year depreciation.Determine Joe's total cost recovery (including the § 179 deduction)for the year.

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Question 8

Discuss the difference between the half-year convention and the mid-quarter convention.

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Question 9

On February 21,2011,Joe purchased new farm equipment for $600,000.Joe has made an election to not have the uniform capitalization rules apply to his farming business.He elects not to take additional first-year depreciation.If Joe elects § 179,what is the maximum write-off for this purchase for 2011?

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Question 10

Nora purchased a new automobile on July 20,2011,for $29,000.The car was used 60% for business and 40% for personal use.In 2012,the car was used 30% for business and 70% for personal use.Nora elects not to take additional first-year depreciation.Determine the cost recovery recapture and the cost recovery deduction for 2012.

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Question 11

Rick purchased a uranium interest for $10,000,000 on January 3,2011,when recoverable reserves were estimated at 200,000 units.A total of 10,000 units were extracted in 2011 and 7,000 units were sold in 2011.Gross income from the property was $2,800,000 and taxable income without the allowance for depletion was $1,000,000.Determine the depletion deduction for 2011.

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Question 12

On August 20,2010,May signed a 10-year lease on a building for her business.On November 28,2011,May paid $80,000 for a qualified leasehold improvement to the building.What is May's cost recovery deduction for the improvement in 2011?

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Question 13

Discuss the beneficial tax consequences of an SUV not being classified as a passenger automobile.

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Question 14

Discuss the effect on the cost recovery method of a taxpayer election if the uniform capitalization rules apply to a farming business.

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Question 15

On April 15,2011,Sam placed in service a storage facility (a single-purpose agricultural structure)costing $80,000.Sam also purchased and planted fruit trees costing $40,000.Sam does not elect to expense any of the acquisitions under § 179.Sam elected not to take additional first-year depreciation.Determine Sam's cost recovery from these two items for 2011.

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Question 16

In 2011,Marci is considering starting a new business.Marci had the following costs associated with this venture:

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Quiz 8: Depreciation, cost Recovery, amortization, and Depletion