Question 1: White Company acquires a new machine (seven-year property) on January 10, 2005, at a cost of $204,000. White makes the election to expense the maximum amount under § 179. No election is made to use the straight-line method. Determine the total deductions in calculating taxable income related to the machine for 2005 assuming White has taxable income of $500,000.
a. $46,294.
b. $51,151.
c. $119,147.
d. $131,152.
Question 2: Margie purchased one new asset during the year (five-year property) on November 10, 2005 (4th quarter), at a cost of $430,000. She made the § 179 election. The income from the business before the cost recovery deduction and the § 179 deduction was $100,000. Determine the total deductions with respect to the asset for 2005.
a. $83,250.
b. $95,000.
c. $100,000.
d. $105,000.
Question 3: Jermaine and Kesha are married, file a joint tax return, have AGI of $75,000, and have two children. Devona is beginning her freshman year at State University during Fall 2005, and Arethia is beginning her senior year at Northeast University during Fall 2005 after having completed her junior year during the spring of that year. Both Devona and Arethia are claimed as dependents on their parents' tax return. Devona's qualifying tuition expenses and fees total $3,500 for the fall semester, while Arethia's qualifying tuition expenses and fees total $5,250 for each semester during 2005. Full payment is made for the tuition and related expenses for both children during each semester. The HOPE scholarship and lifetime learning credits available to Jermaine and Kesha for 2005 are:
HOPE scholarship credit Lifetime learning credit
a. $1,500 $1,050
b. $1,500 $2,000
c. $2,250 $2,625
d. $2,250 $5,250
Question 4: Barry and Susan, who are married and file a joint return, have one child, George. During 2005, Barry earned a salary of $26,000 and they received interest income of $200. Their earned income credit for the year is:
a. $0.
b. $1,091.
c. $1,571.
d. $2,662.