saint leo Acc421 exam 5 quiz (Graded)

Question 1 The key date for calculating cost recovery is the date the asset is placed in service. 1) True 2) False Question 2 Doug purchased a new factory building on January 15 1990 for $400 000. On March 1 2016 the building was sold. Determine the cost recovery deduction for the year of the sale; Doug did not use the MACRS straightline method. 1) $0 2) $1 587 3) $2 645 4) $12 696 5) None of the above Question 3 Residential rental real estate includes property where 80% or more of the net rental revenues are from nontransient dwelling units. 1) True 2) False Question 4 Intangible drilling costs must be capitalized and recovered through depletion. 1) True 2) False Question 5 Taxable income for purposes of § 179 limited expensing is computed by including the MACRS deduction. 1) True 2) False Question 6 Antiques may be eligible for cost recovery if they are used in a trade or business. 1) True 2) False Question 7 On June 1 2016 Red Corporation purchased an existing business. With respect to the acquired assets of the business Red allocated $300 000 of the purchase price to a patent. The patent will expire in 20 years. Determine the total amount that Red may amortize for 2016 for the patent. 1) $0 2) $1 667 3) $11 667 4) $35 000 5) None of the above Question 8 The only asset Bill purchased during 2016 was a new seven-year class asset. The asset which was listed property was acquired on June 17 at a cost of $50 000. The asset was used 40% for business 30% for the production of income and the rest of the time for personal use. Bill always elects to expense the maximum amount under § 179 whenever it is applicable. The net income from the business before the § 179 deduction is $100 000. Determine Bill’s maximum deduction with respect to the property for 2016. 1) $1 428 2) $2 499 3) $26 749 4) $33 375 5) None of the above Question 9 Mary purchased a new five-year class asset on March 7 2016. The asset was listed property (not an automobile). It was used 60% for business and the rest of the time for personal use. The asset cost $900 000. Mary made the § 179 election. The income from the business before the § 179 deduction was $600 000. Mary also takes additional first-year depreciation (if available). Determine the total deductions with respect to the asset for 2016. 1) $72 000 2) $271 600 3) $524 000 4) $600 000 5) None of the above Question 10 The maximum cost recovery method for all personal property under MACRS is 150% declining balance. 1) True 2) False Question 11 If more than 40% of the value of property other than real property is placed in service during the last quarter all of the property placed in service in the second quarter will be allowed 7.5 months of cost recovery. 1) True 2) False Question 12 Any § 179 expense amount that is carried forward is subject to the business income limitation in the carryforward year. 1) True 2) False Question 13 Under the MACRS straight-line election for personality only the half-year convention is applicable. 1) True 2) False Question 14 Property which is classified as personality may be depreciated. 1) True 2) False Question 15 Motel buildings have a cost recovery period of 27.5 years. 1) True 2) False