Exam (elaborations)
HRB – CHAPTER 16 DEPRECIATION TEST
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HRB – CHAPTER 16 DEPRECIATION TEST...
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H&R Block Ch 16 DepreciationAccelerated Cost Recovery System (ACRS) - ANSWER UNMODIFIED
system used for property placed in service after 1980 and before 1987.
Alternative Straight-Line Depreciation System - ANSWER • A MACRS
system of depreciation using the STRAIGHT-LINE method over an alternative
recovery period.
• Choosing either Straight-Line methods for personal-type property, requires
doing so for ALL assets in that class placed in service in that year.
Asset - ANSWER Aiding or contributing property of value.
Business Assets - ANSWER Assets used in a trade or business or used to
produce rental or royalty income.
Business-Use Property - ANSWER Property used to gain income.
Examples include rental houses, machinery, factories, office buildings and
similar items.
Estimated (Useful) Life - ANSWER • The period of time that a depreciable
asset will be used by the current taxpayer.
• The estimated useful life is utilized in the computation of the annual tax
deduction for pre-1981 depreciation.
General Depreciation System - ANSWER Using the Half-Year convention, is
the most widely used method of depreciating tangible personal-type property.
, General Straight-Line Depreciation System - ANSWER A MACRS system of
depreciation using the STRAIGHT-LINE method over the normal MACRS
recovery period for the asset.
Listed Property - ANSWER The IRS publishes a list of assets that are subject
to depreciation restrictions under certain circumstances.
Listed Property Includes:
• Passenger automobiles 6,000 pounds or less, and any other property used for
transportation.
• Property used for entertainment, recreation or amusement, including
photographic, phonographic, communication and video-recording equipment.
• Computers and related peripheral equipment.
NOTE: Cell phones are no longer listed property [2010]
Modified Accelerated Cost Recovery System (MACRS) - ANSWER •
Required method of depreciation for assets placed in service after 1986.
• Computed on the Depreciation Worksheet and Form 4562.
Personal Property - ANSWER All property other than real estate.
Real Property - ANSWER Also known as real estate, includes land, buildings
and their structural components.
Section 179 Expense Deduction (3) - ANSWER An election to treat the cost of
certain qualified property as a currently deductible expense rather than as a
capital expenditure.
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