Question: When depreciating company vehicles under tax rules:

Question:

1. When depreciating company vehicles under tax rules:
2. depreciation limits on autos apply to all vehicles
3. depreciation is limited under GAAP
4. depreciation disallowed for a passenger auto during its recovery period can never be taken
5. a company auto driven by employees for both business and personal use is usually treated as used 100% for business when depreciation is computed (as long as the employer reports the value of the employee's personal use as taxable income on the employee's W-2)
6. All of the above

3 points  

QUESTION 2

1. If a new SUV that costs $50,000 and weighs 6,800 pounds is placed in service in 2018 which of the following is true?
2. depreciation expense is limited, but section 179 is not
3. section 179 and depreciation expense are both limited
4. no limit on section 179 or depreciation expense
5. section 179 is limited, but depreciation expense is not

3 points  

QUESTION 3

1. On May 11 of the current year, your calendar year firm purchases a used machine (7-year property) for $10,000; the machine has an estimated salvage value of $1,000. If the machine is the only fixed asset purchased in the current year, and no Section 179 deduction or bonus depreciation is taken, what is your firm's maximum tax deduction for depreciation this year?
2. $10,000
3. $1,429
4. $9,000
5. $1,286

3 points  

QUESTION 4

1. On May 11 of the current year, your calendar year firm pays $6,000 for a used computer server (5-year property). This is the company's only asset purchase for the year. The company estimates that the server will have a salvage value of $500. If no Section 179 deduction or bonus deprecition is taken, what is your firm's maximum current year deduction for depreciation?
2. $1,200
3. $1,100
4. $869
5. $2,000

3 points  

QUESTION 5

1. Residential realty costing $100,000 was placed in service three years ago. MACRS depreciation for the current year is:
2. $14,286.
3. $3,636.
4. $3,175.
5. $2,500.
6. $2,564.

3 points  

QUESTION 6

1. Nonresidential realty costing $100,000 was placed in service last year. MACRS depreciation for the current year is:
2. $3,175.
3. $2,564.
4. $14,286.
5. $2,500.
6. $3,636.

3 points  

QUESTION 7

1. Below are four asset purchases made in 2018:
2. AssetCostDate of Purchase  Office table    $1,000    January 1, 2018    Office desk    $1,500    September 29, 2018     File cabinet    $2,000    October 15, 2018     Computer    $6,000    December 30, 2018   
3. Assuming the company has net income of $5,000, what is the maximum Section 179 deduction for these purchases?
4. $2,500
5. $0
6. $10,500
7. $5,000

3 points  

QUESTION 8

1. Depreciation of fixed assets under GAAP v. for tax purposes is based on:
2. original cost less salvage value under GAAP v. original cost for tax purposes.
3. original cost both under GAAP and for tax purposes.
4. original cost for GAAP v. the original cost less salvage value for tax purposes.
5. original cost less the salvage value both under GAAP and for tax purposes.

3 points  

QUESTION 9

1. Under MACRS, the recovery period for a passenger auto is:
2. 3 years
3. 7 years
4. 4 years
5. 5 years

3 points  

QUESTION 10

1. Under MACRS, the recovery period for residential real property is:
2. 31½ years
3. 39 years
4. 7 years
5. 27½ years

3 points  

QUESTION 11

1. A business places in service $2,640,000 of equipment in 2018. If the company has net income of $900,000, the maximum Section 179 the business can elect in 2018 is:
2. $0
3. $860,000
4. $900,000
5. $1,000,000
6. $140,000

3 points  

QUESTION 12

1. Generally, under MACRS, the recovery period for a computer is:
2. 7 years
3. 5 years
4. 4 years
5. 3 years

3 points  

QUESTION 13

1. A taxpayer places in service $55,000 of 5-year property on August 16 of the current year, and $45,000 of 7-year property on December 2 of the current year. Assuming the taxpayer elects not to take Section 179 or bonus depreciation, which of the following statements is correct with respect to this taxpayer?
2. The taxpayer uses mid-quarter convention to depreciate both assets
3. The taxpayer uses the mid-quarter convention to depreciate the 5-year property, but uses the half-year convention to depreciate the 7-year property.
4. The taxpayer uses the half-year convention to depreciate the 5-year property, but uses the mid-quarter convention to depreciate the 7-year property.
5. The taxpayer uses half-year convention to depreciate both assets

3 points  

QUESTION 14

1. Depreciation of property other than real property begins in the middle of the quarter in which it is placed in service when more than:
2. 40% of the total cost of all depreciable property placed in service during the year occurs during the fourth quarter.
3. 40% of the total cost of Section 179 property placed in service during the year occurs during the fourth quarter.
4. 25% of the total cost of all depreciable property placed in service during the year occurs during the fourth quarter.
5. 25% of the total cost of Section 179 property placed in service during the year occurs during the fourth quarter.

3 points  

QUESTION 15

1. Generally, under MACRS, the recovery period for office furniture (e.g., desks) is:
2. 4 years
3. 5 years
4. 7 years
5. 3 years

3 points  

QUESTION 16

1. If a new passenger auto that costs $50,000 and weighs 5,000 pounds is placed in service in 2018, which of the following is true?
2. section 179 is limited, but depreciation expense is not
3. section 179 and depreciation expense are both limited
4. no limit on section 179 or depreciation expense
5. depreciation expense is limited, but section 179 is not

3 points  

QUESTION 17

1. A business places $1,640,000 of equipment in service in 2018. If the company has net income of $900,000, the maximum Section 179 the business can elect in 2018 is:
2. $0
3. $640,000
4. $140,000
5. $900,000
6. $1,000,000

3 points  

QUESTION 18

1. On May 11 of the current year, your calendar year firm pays $5,000 for new office furniture (7-year property); this is the only asset purchase for the year. The company estimates that the machine will have a salvage value of $1,000. If your firm elects not to take bonus depreciation or Section 179, how much depreciation will the firm claim on its federal income tax return this year?
2. $5,000
3. $715
4. $4,000
5. $572

3 points  

QUESTION 19

1. Under MACRS, the recovery period for commercial real estate placed in service in 2000 is:
2. 27½ years
3. 31½ years
4. 7 years
5. 39 years

3 points  

QUESTION 20

1. Real estate must be depreciated using the:
2. mid-month convention
3. half-year convention
4. mid-quarter convention