Any gain or loss resulting from the sale or disposition of depreciable property used in trade or business and held one year or less is considered ordinary.
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Any gain or loss resulting from the sale or disposition of
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- Which of the following statements with respect to the depreciation of property under MACRS is incorrect? Under the half-year convention, one-half year of depreciation is allowed in the year the property is placed in service. If a taxpayer elects to use the straight-line method of depreciation for property in the 5 -year class, all other 5 -year class property acquired during the year must also be depreciated using the straight-line method. In some cases, when a taxpayer places a significant amount of property in service during the last quarter of the year, real property must be depreciated using a mid-quarter convention. Real property acquired after 1986 must be depreciated using the straight-line method. The cost of property to which the MACRS rate is applied is not reduced for estimated salvage value.If a depreciable property is revalued at the middle of the current year, how is the depreciation expense for the year determined when the entity has a calendar year-end? a.Depreciation for the first half of the year is based on cost and for the second half on revalued amount. b.Depreciation for the year is based on the average of the depreciation based on cost and on revalued amount. c.Depreciation for the entire year is based on revalued amount. d.Depreciation for the entire year is based on cost.The following properties have been owned by a business for more than one year. Which of them would not qualify for Section 1231 treatment on its disposal? a. Property held for rental income b. Depreciable assets used in the business c. Stock held in Inventory d. Leasehold improvements
- Under which provisions are capital gains and capital losses relating to the following assetsdisregarded:• (a) cars,• (b) pre-20 September 1985 assets,• (c) collectables acquired for $500 or less,• (d) personal use assets acquired for less than $10,000,• (e) assets used to produce exempt income,• (f) depreciating assets,• (g) trading stock,• (h) damages for personal injuries,• (i) gambling winnings, and• (j) the main residence?Which of the following transactions or events is treated as a Sec. 1231 gain or loss? All assets are held for more than one year. (Complete all input fields. If the transaction or event is not a Sec. 1231 gain/loss, select "Not applicable".) Transactions or events Sec. 1231 a. Theft of uninsured diamond ring, with an $800 basis and a $1,000 FMV. Not applicable b. Gain due to condemnation of land used in business. Sec. 1231 gain c. Loss on the sale of a warehouse. Sec. 1231 loss d. Gain of $4,000 on the sale of equipment. Depreciation deductions allowed amount to $10,000. Sec. 1231 gainA taxpayer’s business sells inventory for $80,000. The adjusted basis of the property is $58,000 at the time of the sale and the inventory had been held for more than one year. The taxpayer has: Sold a short-term capital asset. No gain or loss. Sold a long-term capital asset. An ordinary gain (ordinary income).
- An assets is classified as a fixed asset when ______________ a. It has life less than one year b. It is used in the normal business operations and has life more than one year c. It is bought for long term for resale in future d. It is one which has to be depreciated every yearWhich of the following will cause a difference in book depreciation and federal depreciation? Choosing to depreciate a class of property using straight-line on the federal return and straight-line on the books. Depreciating property with a useful life of less than one year. Electing to take a Section 179 deduction on eligible property. Placing property in service mid-year.Casualty gains and losses from business or investment property: a.Are subject to the 10 percent of adjusted gross income limitation. b.Are not subject to the depreciation recapture provisions. c.May be treated differently depending on whether the property has been held 1 year or less or has been held over 1 year. d.Are treated the same as casualty gains and losses from personal property.
