1. On June 2, 2010, Fred's TV Sales sold Mark a large HD TV, on account, for $12,000. Fred's TV Sales uses the accrual method. In 2011, when the balance on the account was $8,000, Mark filed for bankruptcy. Fred was notified that he could expect to receive 60 cents on the dollar of the amount owed to him. In 2012, final settlement was made and Fred received $5,000. How much bad debt loss can Fred deduct and in which years?
a. 2010-$12,000.
b. 2010-$0; 2010-$8,000.
c. 2010-$0; 2010-$3,200; 2011-$0.
d. 2011-$4,800.
e. None of the above.
2. James purchased a new business asset (three-year personalty) on July 23, 2011, at a cost of $50,000. He did not elect to expense any of the asset under § 179, nor did he elect straight-line cost recovery. If Congress reenacts additional first-year depreciation for 2011, James did elect not to take additional first-year depreciation. Determine the cost recovery deduction for 2011.
a. $8,333.
b. $16,665.
c. $33,333.
d. $41,665.
e. None of the above.
3. Carlos purchased an apartment building on November 16, 1991, for $1,000,000. Determine the cost recovery for 2012.
a. $36,360.
b. $32,100.
c. $45,500.
d. $331,850.
e. None of the above.
4. Howard's business is raising and harvesting peaches. On March 10, 2012, Howard purchased 10,000 new peach trees at a cost of $50,000. Howard does not elect to expense assets under § 179. Determine the cost recovery deduction for 2012.
a. $0.
b. $1,250.
c. $2,500.
d. $10,000.
e. None of the above.
5. On June 1, 2012, Sam purchased new farm machinery for $50,000. Sam used the machinery in connection with his farming business. Sam does not elect to expense assets under § 179. Sam has, however, made an election to not have the uniform capitalization rules apply to the farming business. Sam does elect not to take additional first-year depreciation. Determine the cost recovery deduction for 2012.
a. $5,000.
b. $7,500.
c. $10,000.
d. $12,500.
e. None of the above.