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tax 4001 chapter 10 smartbook (1).
tax 4001 chapter 10 smartbook (1).
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tax 4001 chapter 10 smartbookMark's Markers purchased a building and land for $750,000. An appraisal determined
that two-thirds of the cost should be attributed to the building and one-third should be
attributed to the land. Consequently, Mark's Markers will use a cost basis of $ ----- for
the building and ---- for the land - ANS-50,000
25,000
Harry inherited 100 shares of stock from his aunt upon her death. Harry's aunt
purchased the stock 10 years ago for $20 per share. The stock was worth $50 per
share on the date she died. What is the amount of Harry's basis in the stock?
Multiple choice question.
$50
$2000
$5000
$20 - ANS-5000
Which of the following items are needed to calculate MACRS depreciation for an asset?
(Check all that apply.)
Multiple select question.
Applicable depreciation convention
Asset's expected usefulness
Applicable depreciation method
Date placed in service
Applicable recovery period
Asset's depreciable basis
Asset's condition or age - ANS-- Applicable recovery period
- Applicable depreciation convention
- Asset's depreciable basis
- Applicable depreciation method- Date placed in service
The method of deducting the cost of tangible personal and real property over its useful
life is __________. The method of deducting the cost of intangible assets over a
specific time is __________. The method of deducting the cost of natural resources
over time is __________. - ANS-depreciation, amortization, depletion
Antoine owns a car. He uses the car for personal transportation. What is the property
classification of this car? - ANS--personal property-personal use property
, What calculation is used to determine an asset's adjusted basis? - ANS-original basis+
significant improvements-depreciation allowed or allowable
Which depreciation method is most likely to be used by profitable businesses with high
marginal tax rates?
Multiple choice question.
MACRS 200% declining balance
Straight-line depreciation
Alternative depreciation system
Units of activity depreciation method - ANS-MACRS 200% declining balance
Mark's Markers purchased a building and land for $750,000. How should Mark's
Markers account for the purchase?
Multiple choice question.
The land and building must be treated as one asset because they were purchased
together.
The land and building must be treated as separate assets with a portion of the total cost
allocated to each of the assets.
The total purchase price will be allocated to the land because it results in the most
conservative tax treatment.
The total cost will be allocated to the building in order to allow the business to deduct
the maximum amount of depreciation. - ANS-The land and building must be treated as
separate assets with a portion of the total cost allocated to each of the assets.
Lucky started a new business last year. Since it was the first year of operation, the
business purchased $10,000 in machinery and used the straight-line method for
depreciation. Business is booming, so Lucky purchased $15,000 in equipment during
the current year to help meet production demands. Which of the following statements is
true regarding the depreciation choices available to Lucky? - ANS-The new machinery
can be depreciated using the same method or a different method than the previously
purchased machinery.
Harry received 100 shares of stock from his aunt as a gift. Harry's aunt purchased the
stock 10 years ago for $20 per share. The stock was worth $50 per share on the date
Harry received the gift. Harry sold the stock for $60 per share. What is the amount of
Harry's basis in the stock? - ANS-$2000
In order to compute MACRS depreciation, which of the following pieces of information is
NOT required?
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