QUESTION 1 What is the maximum amount of qualified expense property that can be placed in service during the year without causing a reduction in the Section 179 expense ceiling in 2015?
$200,000
$1,000,000
$500,000
$2,000,000
QUESTION 2
In 2015, Vinny purchased and placed in service an SUV for his construction business. The vehicle weighs 8,000 pounds and it is used 100% for business. Vinny paid $72,000 for the SUV. What is the amount of Section 179 depreciation allowed on this SUV?
$25,000
$72,000
$0
$36,000
QUESTION 3
Black Corporation acquired a computer on June 6, 2015 for $60,000. The computer is listed property. Black used the asset 60 percent of the time for business, 30 percent of the time for the production of income, and 10 percent for the personal use of the shareholder. Assume that neither additional first year depreciation nor a Section 179 election is made. What is Black's 2015 cost recovery for this asset?
$3,600
$5,400
$4,800
$10,800
QUESTION 4
Daniel purchases for $400,000 an apartment building in Canada on March 12, 2015. What is Daniel's depreciation deduction for 2015?
$11,516
$7,916
$10,000
$8,132
QUESTION 5
Which statement concerning the alternative depreciation system (ADS) is incorrect ?
In certain situations, a taxpayer may elect to use ADS.
The half-year convention is required for all assets other than realty under ADS.
ADS must be used to compute depreciation for property used primarily outside the U.S.
Real property is depreciated using either a 27.5 or 39 year life.
QUESTION 6
On May 4 of the current year, Byrne purchased a patent that qualifies as a Section 197 intangible. The cost of the patent was $207,000. In the current year, how much of the patent's cost may Byrne amortize?
$9,200
$4,600
$13,800
$1,150
QUESTION 7
Tex Oil Company purchases an oil lease for $1,000,000. After exploration, oil is discovered and it is estimated that 200,000 barrels of oil will be recovered from the lease. If during the current year Tex produces 15,000 barrels of oil from the lease and sells 12,000 barrels, what is the amount of cost depletion allowed to Tex?
$60,000
$120,000
$75,000
$150,000
QUESTION 8
Blanco Corporation acquired a computer on June 6, 2015, for $60,000. The computer is listed property. Blanco used the asset 40 percent of the time for business, 50 percent of the time for the production of income, and 10 percent for the personal use of the shareholder. If Blanco Corporation does not make a Section 179 election or elect bonus depreciation, what is the 2015 cost recovery for this asset?
$3,000
$10,800
$4,800
$5,400
QUESTION 9
On February 11, 2015, Ann leases and places in service a passenger automobile. There are 323 days left in the year after February 11 and the lease is for five years. During the year, she uses the automobile 80 percent for business and 20 percent for personal use. Assuming the IRS table amount for is $202, how much must Ann include in gross income in 2015?
$35
$0
$143
$202
QUESTION 10
On July 1, 2015, farmer John acquires a used tractor and other farm equipment at a cost of $620,000. This is his only capital acquisition for the year. John is married and files a joint return for 2015. What amount can John expense under Section 179 for the year of 2015 and what amount is subject to regular MACRS depreciation, assuming John has adequate taxable income from his business of farming?
$620,000, $0
$500,000, $120,000
$500,000, $150,000
$0, $620,000
QUESTION 11
Which of the following statements is incorrect ?
If automobiles or listed property are used for business more than 50% of the time, no restrictive rules are applicable.
For automobiles or listed property, the straight-line method of depreciation is required if business use is not more than 50 percent.
Cost recovery for automobiles is subject to special limitations that affect the timing of available deductions.
The additional first-year depreciation deduction is not allowed for automobiles or listed property where business use is less than 50 percent.
QUESTION 12
On February 26 of the current year, Ivy Corporation placed in service a used warehouse costing $1 million. Determine the cost recovery for the year.
$34,850
$22,470
$31,820
$27,780
QUESTION 13
Maggie acquires a five-year MACRS asset on June 3, 2015 for $30,000. This is her only acquisition for the year. Her business income (ie. Taxable Income Before Section 179 Deduction) for 2015 is $10,000, before any depreciation deduction. Calculate Maggie's maximum write-off under Sec. 179 for 2015.
$25,000
$10,000
$30,000
$20,000
QUESTION 14
Karen purchased a used automobile on June 15, 2014, at a cost of $20,000. Karen used the car 75 percent for business use and 25 percent for personal use in 2014. In 2015, Karen used the automobile 40 percent for business and 60 percent for personal use. What is Karen's excess depreciation to be recaptured in 2015?
$2,175
$870
$2,295
$0
QUESTION 15
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$316
$1,580
$3,160
$2,844
QUESTION 16
Sun Corporation acquires $210,000 of 5-year MACRS property in the first quarter of 2015. If the company does not make a Section 179 election, but does elect additional first year bonus depreciation, what is Sun's total depreciation deduction for the year?
$89,000
$126,000
$21,000
$105,000
QUESTION 17
Which write-off method would be used for tax purposes for a patent?
Amortization
Depletion
Alternative Depreciation System
MACRS
QUESTION 18
On January 3, 2013, Heather purchased land that cost $150,000. She planned to build an apartment building (which would have an estimated useful life of 30 years) on the land. The apartment building was completed on March 15, 2015, at a cost of $875,000. How much depreciation expense can Heather claim this year?
$25,191
$17,779
$4,319
$29,510
QUESTION 19
On February 26 of the current year, Ivy Corporation placed in service a new warehouse costing $1 million. Determine the cost recovery for the year.
$22,470
$31,820
$27,780
$34,850
QUESTION 20
The Pit Sulfur Company has gross income of $200,000 from certain property (not oil and gas property) subject to depletion. The expenses related to that property are $140,000, and a statutory depletion rate of 22 percent is applicable. Under the percentage depletion method, what is the amount of depletion for the current year?
$13,200
$60,000
$44,000
$30,000
QUESTION 21
Harry purchased a 7-year business asset (not listed property) on July 30, 2012, at a cost of $100,000. The asset was not new when Harry acquired it. Harry did not elect to expense under Section 179 or elect additional first year depreciation nor did he elect straight-line cost recovery. Harry sold the asset on February 11, 2015. What is Harry's cost recovery for 2015?
$0
$8,745
$7,145
$6,245
QUESTION 22
Under MACRS, the cost recovery tables for eligible real estate use a
Mid-quarter convention.
Mid-month convention.
Half-month convention.
Half-year convention.
QUESTION 23
Which write-off method would be used for tax purposes for a coal mine?
Alternative Depreciation System
Amortization
Depletion
MACRS
QUESTION 24
Julio purchases listed property (not an automobile). The listed property is used 80 percent for business and 20 percent for personal purposes. What method of cost recovery must Julio use on the listed property?
Straight-line increased by the personal use percentage
Statutory MACRS percentage reduced by personal use percentage
Statutory MACRS percentage increased by personal use percentage
Straight-line reduced by the personal use percentage
QUESTION 25
On June 1, 2015, Gwen purchased a dental practice from George for $267,000. The purchase price was allocated $225,000 to the tangible assets of the practice and $42,000 to goodwill. What is the amount of Gwen's deduction for amortization of goodwill for 2015?
$2,800
$1,633
$8,400
$0
QUESTION 26
On May 10, 2015, Jessica signed a 15-year lease with Juan on a two-year old building to be used for his business. The lease period begins on June 1, 2015, and ends on May 31, 2027. Prior to the signing of the lease, Juan paid $100,000 to have a distinctive storefront added to the building. Juan's cost recovery deduction for 2015 for the addition is:
$0
$1,391
$100,000
$811
QUESTION 27
Which taxpayer described below is allowed to write off real property used in a trade or business over 27.5 years?
Bill placed residential rental property in service this year.
Chris placed land in service this year.
Ann placed a manufacturing facility in service in July 1987
Mary placed commercial real estate in service this year.
QUESTION 28
Cooper Corporation begins business on August 1, 2015. The corporation has startup expenditures of $52,000. If Cooper Corporation elects IRC Section 195, what is the total amount of startup expenditures that the corporation may deduct in 2015?
$4,361
$1,361
$5,000
$52,000