FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 5: Business Deductions

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 91

Multiple Choice

Review LaterAdd Note

Review Later

Tan Company acquires a new machine (ten-year property) on January 15, 2017, at a cost of $200,000.Tan also acquires another new machine (seven-year property) on November 5, 2017, at a cost of $40,000.No election is made to use the straight-line method.The company does not make the § 179 election and elects to not take additional first-year depreciation.Determine the total deductions in calculating taxable income related to the machines for 2017.

A) $24,000
B) $25,716
C) $102,000
D) $132,858
E) None of the above

F) None of the above
G) A) and D)

Correct Answer

verified

Show Answer

Question 92

Multiple Choice

Review LaterAdd Note

Review Later

Tara purchased a machine for $40,000 to be used in her business.The cost recovery allowed and allowable for the three years the machine was used are computed as follows. $\begin{array} { c c c } & \text { Cost Recovery Allowed } & \text { Cost Recovery Allowable } \\\text { Year 1 } & \$ 16,000 & \$ 8,000 \\\text { Year 2 } & 9,600 & 12,800 \\\text { Year 3 } & 5,760 & 7,680\end{array}$ If Tara sells the machine after three years for $15,000, how much gain should she recognize?

A) $3,480
B) $6,360
C) $9,240
D) $11,480
E) None of the above

F) B) and D)
G) C) and E)

Correct Answer

verified

Show Answer

Question 93

Multiple Choice

Review LaterAdd Note

Rex, a cash basis calendar year taxpayer, runs a bingo operation which is illegal under state law.During 2017, a bill designated H.R.9 is introduced into the state legislature which, if enacted, would legitimize bingo games.In 2017, Rex had the following expenses:a $\begin{array} { l r } \text { Operating expenses in conducting bingo games } & \$ 247,000 \\\text { Payoff money to state and local police } & 24,000 \\\text { Newspaper ads supporting H.R. 9 } & 3,000 \\\text { Political contributions to legislators who support H.R. 9 } & 8,000\end{array}$ Of these expenditures, Rex may deduct:

Research and experimental expenditures do not include the cost of consumer surveys.

Discuss the requirements in order for startup expenditures to be amortized under § 195.

A taxpayer's note or promise to pay satisfies the "actually paid" requirement for the cash basis method of accounting.

Discuss the tax consequences of listed property being used for the production of income compared to being used in a trade or business.

Jacques, who is not a U.S.citizen, makes a contribution to the campaign of a candidate for governor.Cassie, a U.S.citizen, also makes a contribution to the same campaign fund.If contributions by noncitizens are illegal under state law, the contribution by Cassie is deductible, while that by Jacques is not.

Which of the following may be deductible?

Taxable income for purposes of § 179 limited expensing is computed by including the MACRS deduction.

On May 2, 2017, Karen placed in service a new sports utility vehicle that cost $60,000 and has a gross vehicle weight of 6,300 lbs.The vehicle is used 60% for business and 40% for personal use.Determine Karen's total cost recovery for 2017.Karen wants to use both §179 and additional first-year depreciation.

The amortization period for $58,000 of startup expenses is 180 months.

Rustin bought used 7-year class property on May 15, 2017, for $738,000.Rustin elects § 179 and straight-line cost recovery.Rustin's taxable income would not create a limitation for purposes of the § 179 deduction.Determine the maximum cost recovery deduction Rustin can claim for 2017.