Income Tax Fundamentals 2020
38th Edition
ISBN: 9780357391129
Author: WHITTENBURG
Publisher: Cengage
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Textbook Question
Chapter 8, Problem 5MCQ
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.
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Income Tax Fundamentals 2020
Ch. 8 - Alice purchases a rental house on August 22,2019,...Ch. 8 - An asset (not an automobile) put in service in...Ch. 8 - An asset (not an automobile) put in service in...Ch. 8 - James purchased office equipment for his business....Ch. 8 - Which of the following statements with respect to...Ch. 8 - Which of the following is not true about the MACRS...Ch. 8 - On July 20,2019, Kelli purchases office equipment...Ch. 8 - Which of the following is not considered a limit...Ch. 8 - In 2019, Ben purchases and places in service a new...Ch. 8 - In 2019, Ben purchases and places in service a new...
Ch. 8 - Prob. 11MCQCh. 8 - Prob. 12MCQCh. 8 - Prob. 13MCQCh. 8 - In 2019, Mary sells for $24,000 a machine used in...Ch. 8 - Prob. 15MCQCh. 8 - Prob. 16MCQCh. 8 - Virginia has business property that is stolen and...Ch. 8 - Pat sells land for $25,000 cash and a $75,000...Ch. 8 - Prob. 19MCQCh. 8 - Prob. 20MCQCh. 8 - Oscar owns a building that is destroyed in a...Ch. 8 - Prob. 22MCQCh. 8 - Prob. 1PCh. 8 - Prob. 2PCh. 8 - 3. Mike purchases a new heavy-duty truck (5-year...Ch. 8 - On March 8,2019, Holly purchased a residential...Ch. 8 - Prob. 5PCh. 8 - Prob. 6PCh. 8 - Calculate the following: The first year of...Ch. 8 - During 2019, William purchases the following...Ch. 8 - On February 2,2019, Alexandra purchases a personal...Ch. 8 - On September 14,2019, Jay purchased a passenger...Ch. 8 - Tom has a successful business with $100,000 of...Ch. 8 - Prob. 14PCh. 8 - Annie develops a successful tax practice. She...Ch. 8 - Prob. 18PCh. 8 - Prob. 19PCh. 8 - Prob. 20PCh. 8 - Prob. 21P
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- At the beginning of 2019, Conley Company purchased an asset at a cost of 10,000. For financial reporting purposes, the asset has a 4-year life with no residual value and is depreciated by the straight-line method beginning in 2019. For tax purposes, the asset is depreciated under MACRS using a 5-year recovery period. Prior to 2019, Conley had no deferred tax liability or asset. The difference between depreciation for financial reporting purposes and income tax purposes is the only temporary difference between pretax financial income and taxable income. The current income tax rate is 30%, and no change in the tax rate has been enacted for future years. In 2019 and 2020, taxable income will be higher or lower than financial income by what amount?arrow_forwardWhich of the following is not considered a limit on the immediate expensing election of Section 179? Fifty percent of qualified improvement property Total Section 179 -eligible property acquired in excess of $3,570,000 The taxable income of the taxpayer considering all income and deductions except for Section 179 immediate expensing An annual limit of $1,020,000 None of the abovearrow_forwardMichael Sima, a sole proprietor craftsman, purchased an amount of equipment in the current year that exceeded the maximum allowable 179 depreciation election limit by 20,000. Simas total purchases of property placed in service in the current year did not exceed the limit imposed by 179. All of the property (including the equipment) was purchased in November of the current year, and Sima elected to depreciate the maximum amount of equipment under 179. Sima had bottom-line Schedule C income of 50,000 in the current year. Which method may Sima use to depreciate the remaining equipment in the current year? a. Sima may not depreciate any additional equipment other than the 179 maximum in the current year and must carry forward the excess amount to use in the following taxable year. b. MACRS half-year convention for personal property. c. MACRS mid-quarter convention for personal property. d. Straight-line, mid-month convention over 27.5 years for real property.arrow_forward
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