Exam 3 Individual Taxation - CH's: 10,11,12,13

Tax cost recovery methods do not include:

• amortization

• capitalization

• depletion

• depreciation

• all of the choices are tax cost recovery methods

Which of the following is not usually included in an asset's tax basis?

• purchase price

• sales tax

• shipping

• installation cost

• all of these choices are included in an asset's tax basis

How is the recovery period of an asset determined?

• Estimated useful life

• treasury regulation

• Revenue Procedure 87-56

• Revenue Ruling 97-56

• None of these choices are correct

Which of the following assets is eligible for §179 expensing?

• Used office machinery

• Qualified improvement property

• A new delivery truck

• Used office furniture

• All of the choices are correct

Which of the following assets are eligible for bonus depreciation?

• used office machinery

• qualified improvement property

• a new delivery truck

• used office furniture

• all of the choices are correct

Jasmine started a new business in the current year. She incurred $10,000 of start-up costs. How much of the start-up costs can be immediately deducted (excluding amounts amortized over 180 months) for the year?

• $0

• $2500

• $5000

• $10000

• none of the choices are correct

Which of the following is not used in the calculation of the amount realized?

• cash

• adjusted basis

• fair market value of other property received

• buyers assumption of liabilities

• all of the choices are used

The sale at a loss of machinery that was used in a trade or business and held for more than one-year results in which of the following types of loss?

• capital

• section 291

• section 1231

• section 1245

• none of the choices are correct

The sale of computer equipment used in a trade or business for nine months results in which of the following types of gain or loss?

• capital

• ordinary

• section 1231

• section 1245

• none of these choices are correct

Foreaker LLC sold a piece of land that it uses in its business for $52,000. Foreaker bought the land two years ago for $42,500. What is the amount and character of Foreaker's gain?

• • $9,500 §1221

• $9,500 §1231

• • $9,500 §1245

• • $9,500 §1250

• none of these choices are correct