Chapter 8
Question 3
Discuss whether land improvements are eligible for cost recovery.
Question 8
Discuss what property qualifies for additional first-year depreciation.
Question 11
Robert purchased and placed in service $100,000 of 7-year class assets in August 10 of the current year. He also purchased and placed in service $500,000 of 5-year class assets on November 15 of the current year. He does not claim any available additional first-year depreciation. If Robert elects to use the MACRS straight -line method of cost recovery on the 7-year class assets, discuss the calculation of cost recovery for the 5-year class assets.
Question 35
Juan acquires a new 5-year class asset on March 14, 2014 for $200,000. This is the only asset Juan acquired during the year. He does not elect immediate expensing under 179. He does not claim any available additional first-year depreciation. On July 15, 2015 Juan sells the assets.
a. Determine Juan's cost recovery for 2014
b. Determine Juan's cost recovery for 2015.
Question 36
Debra acquired the following new assets during 2014
Date Asset Cost
April 11 Furniture $40,000(*x% = $XXX)
July 28 Trucks $40,000(*x% = $XXX)
November 3 Computers $70,000(*X% = $XXX) Total $XXX
Determine Debra's cost recovery deductions for the current year. Debra does not elect immediate expensing under 179. She does not claim any available additional first-year depreciation.
Chapter 9
Question 3
Mason performs services for Isabella. In determining whether Mason is an employee or an independent contractor, comment on the relevance of each of the factors listed below.
a. Mason performs services only for Isabella and does not work for anyone else.
b. Mason sets his own work schedule.
c. Mason reports his job-related expenses on a schedule-C.
d. Mason obtained his job skills form Isabella's training program.
e. Mason performs the services at Isabella's business location.
f. Mason is paid based on time worked rather than on task performed.
Question 10
Explain the difference between travel expenses and transportation expenses.
Question 26
What tax return reporting procedures must be followed by an employee under the following circumstances.
a. Expenses and reimbursements are equal under an accountable plan.
b. Reimbursements at the appropriate Federal per diem rate exceed expenses, and an adequate accounting is made to the employer
c. Expenses exceed reimbursements under a nonaccountable plan.
Question 27
Comment on the deductibility of each of the following items.
a. Club dues for the Colorado Club. Taxpayer, a lawyer, uses the luncheon club exclusively for business.
b. Cost of dry cleaning uniforms (including alterations by a tailor). Taxpayer is the doorman at a New York City hotel.
c. Expenses incurred by taxpayer, a member of the Maine National Guard, to participate in a two-day training session conducted in New Jersey.
d. Union dues paid by a self-employed carpenter.
e. Cost of CPA exam review course paid by a self-employed accountant.
f. Fee paid to a real estate appraiser to determine the value of land a taxpayer is donating to charity.
g. Contribution to an IRA sponsored by taxpayer's employer.
h. Cost of school supplies purchased by a high school teacher.
i.
Question 33
Kristen the regional manager for a national hardware chain, is based in Atlanta. During March and April of this year, she gas to replace temporarily the district manager in Jackson (Mississippi). During this period Kristen fkies to Hackson on Sunday night, spends the week at the district office, and returns home to Atlanta on Friday afternoon. The cost of returning home is $550, while the cost of spending the weekend in Jackson would have been $490.
a. Presuming no reimbursement by her employer, how much, if any, of these weekend expenses may Kristen deduct?
b. Would your answer in (a) change if the amounts involved are reversed (i.e. the trip home cost $490; staying in Jackson would have been $550)? Explain.