BUSINESS

Question 63

  1. A business machine, which cost $10,000 two years ago, was sold on January 1, this year, for $19,000.  Depreciation was as follows for the calendar-year taxpayer:

    Actual Depreciation                     Straight-line Would
     Allowed and Allowable         Have Been   

    Two years ago           $1,429                                             $1,000
    Last year                     2,449                                               2,000
    This year                        875       500
    $4,753                                             $3,500

    63.     The adjusted basis of the property sold is:

    a.a.       $5,247

    b.
    b.       $6,500

    c.
    c.       $10,000

    d.
    d.       None of the above

1 points  

Question 64

  1. The gain realized and recognized on the sale is:

    a.a.       $9,000

    b.
    b.       $12,500
    c.
    c.       $13,753.
    d.
    d.       $19,000

    e.
    e.       None of the above

1 points  

Question 65

  1. The character or nature of the gain realized and recognized is:

    a.a.       All ordinary income
    b.
    b.       All capital gain

    c.
    c.       $4,753 ordinary income, $9,000 1231 capital gain

    d.
    d.       $3,500 ordinary income, $9,000 1231 capital gain

    e.
    e.       None of the above

1 points  

Question 66

  1. Eighteen-year ACRS nonresidential real property owned by an individual has accumulated accelerated depreciation of $975,000 at January 1, of this year.  This property is sold on January 1, this same year.  The original cost of the property was $975,000.  The sale price was $1,000,000.

    66.     The amount of the realized and recognized gain is:

    a.a.       $60,000
    b.
    b.       $150,000
    c.
    c.       $175,000

    d.
    d.       $1,000,000

    e.
    e.       None of the above

1 points  

Question 67

  1. The character or nature of the gain realized and recognized is:

    a.a.       All ordinary gain
    b.
    b.       All capital gain
    c.
    c.       $105,000 capital gain, $70,000 ordinary income

    d.
    d.       $25,000 capital gain, $975,000 ordinary income

    e.
    e.       None of the above

1 points  

Question 68

  1. If the property had been depreciated using the straight-line method, which of the answers to question 67 would now be correct?

    a.a.       All ordinary gain
    b.
    b.       All capital gain

    c.
    c.       $105,000 capital gain, $70,000 ordinary income
    d.
    d.       $25,000 capital gain, $975,000 ordinary income
    e.
    e.       None of the above

1 points  

Question 69

  1. The half-year conventions used by the ACRS rules and the MACRS rules are the same. True
    False

0.5 points  

Question 70

  1. Under MACRS rules, a mid-quarter convention is required if more than 40% of the value of personal property is placed in service during the fourth quarter of the year.

    True
    False

0.5 points  

Question 71

  1. For personal property placed in service after December 31, 1992, the S 179 maximum deduction is limited to $17,500.

    True
    False

0.5 points  

Question 72

  1. The more-than 50% business use only test applies to passenger automobiles.

    True
    False

0.5 points  

Question 73

  1. The Alternate Depreciation System (ADS) is used to calculate depreciation for AMT.

    True
    False

0.5 points  

Question 74

  1. Acquired goodwill is amortized over a 15-year period, with a half-year convention.

    True
    False

0.5 points  

Question 75

  1. 75-76. Polly purchased a new factory building in April, 5 years ago for $5,000,000. On March 3, this year, the building was sold.

    75.     To calculate the cost recovery in the year of disposition, the percentage from the table must be multiplied by:

    a.a.       2
    b.
    b.       1

    c.
    c.       2.5 over 12

    d.
    d.       3.5 over 12

    e.
    e.       None of the above

1.75 points  

Question 76

  1. The allowable cost recovery in the year of disposition is:

    a.a.       $26,708
    b.
    b.       $33,073

    c.
    c.       $66,146
    d.
    d.       $396,876

    e.
    e.       None of the above

1.75 points  

Question 77

  1. 77-78. Rocky bought 7-year class property on January 4, this year, for $120,000. Assume his business income is $6,000 before the deduction for the Section 179 expense.

    77.     The amount of the currently deductible 179 expense is:
    a.a.       $4,000

    b.
    b.       $6,000

    c.
    c.       $10,000

    d.
    d.       None of the above

1.75 points  

Question 78

  1. The MACRS table percentage (if the table is to be used) which would be applied to the remaining basis of the asset to calculate cost recovery in the first year (in addition to the 179 expense) is:

    a.a.       .1429

    b.
    b.       0

    c.
    c.       .20

    d.
    d.       None of the above

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