Question 1

Kristine sold two assets on March 20th of the current year. The first was machinery with an original basis of $51,000, currently in the fourth year of depreciation, and under the half-year convention. The second was furniture with an original basis of $16,000 placed in service during the fourth quarter, currently in the third year of depreciation, and under the mid-quarter convention. What is Kristine's depreciation expense for the current year, rounded to the nearest whole number?

Accepted Answer

The answer of Kristine sold two assets on March 20th...

Question 2

Santa Fe purchased the rights to extract turquoise on a tract of land over a five-year period. Santa Fe paid $300,000 for extraction rights. A geologist estimated that Santa Fe will recover 5,000 pounds of turquoise. During the past several years, 4,000 pounds were extracted. During the current year, Santa Fe extracted 1,500 pounds of turquoise, which it sold for $250,000. What is Santa Fe's cost depletion expense for the current year?

Accepted Answer

A)   $60,000
B)   $90,000
C)   $190,000
D)   $160,000
E)   None of theseF) C) and E)
G) C) and D)

Question 3

Taxpayers may use historical data to determine the recovery period for tax depreciation.

Accepted Answer

A) True 
 B)False

Question 4

In 2014, Northern LLC placed in service on September 6th machinery and equipment (7-year property) with a basis of $2,200,000. Assume that Northern has sufficient income to avoid any limitations. Calculate the maximum depreciation expense including §179 expensing (ignore any potential bonus expensing), rounded to the nearest whole number. Assume the 2013 §179 limits are extended to 2014.

Accepted Answer

The answer of In 2014, Northern LLC placed in service...

Question 5

Tax cost recovery methods do not include:

Accepted Answer

A)   Amortization
B)   Capitalization
C)   Depletion
D)   Depreciation
E)   All of these are tax cost recovery methodsF) None of the above
G) A) and E)

Exam 9: Property Acquisition and Cost Recovery

Correct Answer
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Tax cost recovery methods do not include:

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Taxpayers may use historical data to determine the recovery period for tax depreciation.

Correct Answer
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Exam 9: Property Acquisition and Cost Recovery

Correct AnswerverifiedShow Answer

Tax cost recovery methods do not include:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Taxpayers may use historical data to determine the recovery period for tax depreciation.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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