Question : 41. Jenny constructed a building for use as a residential rental : 1313576

41. Jenny constructed a building for use as a residential rental property. The cost of the building was $164,975, and it was placed in service on August 1, 1990. The building has a 27.5-year MACRS life. What is the amount of depreciation on the building for 2014 for tax purposes?

a. $2,250

b. $3,000

c. $6,000

d. $6,547

e. None of the above

42. ABC Corp bought a production machine on January 1, 2012 for $31,250. The company elected out of Section 179 expensing and elected out of claiming bonus depreciation in 2012, and is depreciating the machine using the MACRS accelerated depreciation tables for 5-year property. What is the 2014 depreciation (year 3) deduction for the machine?

a. $6,000

b. $6,250

c. $10,000

d. $12,500

e. None of the above is correct

43. Which one of the following is true about Modified Accelerated Cost Recovery System (MACRS)?

a. A building is depreciated using 200 percent declining balance depreciation.

b. Buildings and autos both have the same depreciation life.

c. A light duty business truck is depreciated using accelerated depreciation.

d. All of the above are false.

44. Steve Corp bought a $600,000 apartment building in June of 2013. Of the purchase price, $104,950 is allocated to the value of the land. What is the maximum amount of depreciation that the company can claim in 2014 (year 2) for the building?

a. $9,752

b. $18,000

c. $25,000 under the election to expense business property

d. $21,816

e. You cannot depreciate property costing over $500,000

45. Which of the following statements with respect to the depreciation of real property under MACRS is correct?

a. Real property is depreciated using a mid-quarter convention.

b. Only one-half year of depreciation is allowed in the year of acquisition of real property, regardless of the actual date the property is placed in service.

c. Assuming the property is not disposed of during the year, the depreciation deduction for the second year of use of the real property will be greater than the depreciation deduction in the first year.

d. In some cases, where a significant amount of property is acquired during the last quarter of the taxpayer’s tax year, the taxpayer may be required to use a mid-quarter convention in calculating depreciation on real property.

e. None of the above.

46. John purchases residential rental property on September 30, 2014 for a cost of $290,000. Of this amount, $140,000 is allocable to the cost of the home and the remaining $150,000 is allocable to the cost of the land. What is John’s maximum depreciation deduction for 2014?

a. $5,090

b. $1,485

c. $1,061

d. $370

e. None of the above

47. On January 1, 2014, Roxburgia Company places a commercial storage building in service. The costs allocated to construction of the building total $300,000 and land is accounted for separately. Which of the following is a true statement with respect to the depreciation of the building?

a. The period over which the building must be depreciated is shorter than the period over which a residential building must be depreciated.

b. Since the building was placed in service on the first day of the year, the depreciation expense for each year the building is used, except for the year of disposition, will be the same amount.

c. Since the land is accounted for separately, the amount of depreciation expense for the building cannot be determined from the information given.

d. The depreciation expense for Year 2 would be the same regardless of whether the building is placed in service on January 1, 2014 or February 1, 2014.

e. All of the above.

48. What is the minimum number of years over which computers may be depreciated under MACRS?

a. 3 years

b. 5 years

c. 7 years

d. 10 years

e. 15 years

49. Which of the following is true about the MACRS depreciation system?

a. No salvage value is used before depreciation percentages are applied to depreciable real estate.

b. Residential rental buildings are depreciated straight-line over 20 years .

c. Commercial real estate buildings are depreciated over 39 years using accelerated depreciation.

d. No matter when equipment is purchased during the month, it is considered to have been purchased mid-month for MACRS depreciation purposes.

50. An asset other than a passenger automobile is placed in service on May 15, 2014 and has a depreciable basis of $36,000. The asset is in the 7-year recovery class. What is the maximum depreciation deduction that may be claimed for 2014, excluding the election to expense and bonus depreciation?

a. $2,572

b. $5,144

c. $25,000

d. $36,000

e. None of the above