Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Textbook Question
Chapter 8, Problem 7CPA
Which statement below is correct?
- a. Real property is
depreciated using the half-year convention. - b. Residential real estate is depreciated over a 39-year life.
- c. One-half month of depreciation is taken for the month real property is disposed of.
- d. Salvage value is considered in MACRS depreciation.
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Choose the correct statement regarding tax depreciation.
a. Nonresidential real property is depreciated over 27.5 years.
Ob. Residential real property is depreciated over 39 years.
Oc.
c. Depreciation on real property starts at the beginning of the year in which the property is placed in service.
Od. Nonresidential real property is depreciated over 39 years.
Which of the following statements is true for real rental property that has been depreciated using the mid-month convention in the year of disposition?
(a) The depreciation in the year of disposition will be the same as the depreciation in a regular year.
(b) The deductible amount will be half the depreciation determined for the full year.
(c) The deductible amount will be determined by the month in which the asset is disposed.
(d) Using information from the MACRS percentage tables, the calculation is made based on a short tax year.
1: For the properties listed below compute the depreciation taken during the useful life of the property. Assume that all property is post-1986 property. Assign 15 percent of the cost to land for residential and commercial properties. property.
2. Include columns for the applicable AMT depreciation and the accompanying AMT adjustment.
FACT: The AMT adjustment for personal property is the difference between the depreciation taken under MACRS and the amount determined by using the 150% declining balance (DB) method under ADS. The AMT adjustment for real property is the difference between the depreciation taken under MACRS and the amount determined by using the straight line (SL) method under ADS.
PROPERTY COST PLACED IN SERVICE
Tractor unit 35,000 15 Feb
Racehorse over 2 years old 6,000 12 May
Computer 5,000 25 Nov
Luxury Automobile 86,000 15 May 2021
General Purpose Truck 44,000 13 Oct
Office Desk 4,200 5 Jan
Office Safe 10,800 7 Sept
Light Boat 15,000 27 July
Petroleum Refining…
Chapter 8 Solutions
Individual Income Taxes
Ch. 8 - Prob. 1DQCh. 8 - Prob. 2DQCh. 8 - Prob. 3DQCh. 8 - Prob. 4DQCh. 8 - Prob. 5DQCh. 8 - Prob. 6DQCh. 8 - Prob. 7DQCh. 8 - LO.2 Robert purchased and placed in service...Ch. 8 - LO.2 Jim owns a very large ranch. A large part of...Ch. 8 - Prob. 10DQ
Ch. 8 - Explain how the 179 immediate expensing deduction...Ch. 8 - Prob. 12DQCh. 8 - Discuss the definition of business income as it is...Ch. 8 - Prob. 14DQCh. 8 - Prob. 15DQCh. 8 - Prob. 16DQCh. 8 - Prob. 17DQCh. 8 - Prob. 18DQCh. 8 - Prob. 19DQCh. 8 - Prob. 20DQCh. 8 - LO.2 Euclid acquires a 7-year class asset on May...Ch. 8 - LO.2 Hamlet acquires a 7-year class asset on...Ch. 8 - LO.2 Lopez acquired a building on June 1, 2014,...Ch. 8 - LO.2 Andre acquired a computer on March 3, 2019,...Ch. 8 - LO.2, 3 Diana acquires, for 65,000, and places in...Ch. 8 - LO.3 McKenzie purchased qualifying equipment for...Ch. 8 - LO.4 On April 5, 2019, Kinsey places in service a...Ch. 8 - LO.7 On October 1, 2019, Priscilla purchased a...Ch. 8 - Prob. 29CECh. 8 - Prob. 30CECh. 8 - Prob. 31PCh. 8 - Prob. 32PCh. 8 - LO.2 Orange Corporation acquired new office...Ch. 8 - LO.2 Weston acquires a new office machine (7-year...Ch. 8 - LO.2 Juan acquires a new 5-year class asset on...Ch. 8 - LO.2 Debra acquired the following new assets...Ch. 8 - LO.2 On August 2, 2019, Wendy purchased a new...Ch. 8 - Prob. 38PCh. 8 - LO.2 On May 5, 2019, Christy purchased and placed...Ch. 8 - Prob. 40PCh. 8 - Lori, who is single, purchased 5-year class...Ch. 8 - LO.2, 3 Olga is the proprietor of a small...Ch. 8 - LO.2, 3, 9 On June 5, 2018, Javier Sanchez...Ch. 8 - LO.3, 4 Jabari Johnson is considering acquiring an...Ch. 8 - LO.2, 4 On October 15, 2019, Jon purchased and...Ch. 8 - LO.4 On June 5, 2018, Leo purchased and placed in...Ch. 8 - LO.2, 3, 4 On March 15, 2019, Helen purchased and...Ch. 8 - LO.2, 4 On May 28, 2019, Mary purchased and placed...Ch. 8 - Prob. 49PCh. 8 - LO.2, 4, 9 Dennis Harding is considering acquiring...Ch. 8 - LO.2, 5 In 2019, Muhammad purchased a new computer...Ch. 8 - LO.2, 5, 9 Jamie purchased 100,000 of new office...Ch. 8 - Prob. 53PCh. 8 - Prob. 54PCh. 8 - Prob. 55PCh. 8 - Prob. 56PCh. 8 - Prob. 57CPCh. 8 - John Smith, age 31, is single and has no...Ch. 8 - Your client, Daves Sport Shop, sells sports...Ch. 8 - Prob. 2RPCh. 8 - Prob. 3RPCh. 8 - Michael Sima, a sole proprietor craftsman,...Ch. 8 - Cox Construction, a company in its 10th year of...Ch. 8 - Stem Corp. bought a machine in February of year 7...Ch. 8 - Prob. 4CPACh. 8 - Data, Inc., purchased and placed in service a...Ch. 8 - Data, Inc., purchased and placed in service 5,000...Ch. 8 - Which statement below is correct? a. Real property...Ch. 8 - Charlie purchased an apartment building on...
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- Which of the following is not true about the MACRS depreciation system: A salvage value must be determined before depreciation percentages are applied to depreciable real estate. Residential rental buildings are depreciated over 27.5 years straight-line. Commercial real estate buildings are depreciated over 39 years straight-line. No matter when during the month depreciable real estate is purchased, it is considered to have been placed in service at mid-month for MACRS depreciation purposes.arrow_forwardAn asset that has an estimated physical life of six years and an estimated service life of four years should be depreciated over: a. Four years. b. Five years. c. Six years. d. Any of these choices can be chosen by management.arrow_forwardWhat is the correct process for determining depreciation expense for partial periods? A: The straight line method should be used for the first year of the assets life. B: The salvage value should be equal to last year's depreciation amount. C: No depretiation should be expensed in the year of acquisition. D: Depreciation for physical years should be broken up between fiscal years.arrow_forward
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