Question :
61. On June 1, 2014, Cork Oak Corporation purchased a passenger : 1313578
61. On June 1, 2014, Cork Oak Corporation purchased a passenger automobile for 100 percent use in its business. The auto, with a cost basis of $22,000, has a 5-year estimated life. It also is 5-year recovery property. How much depreciation should be taken for 2014, assuming Cork Oak Corporation uses the accelerated depreciation method under MACRS but does not choose to make the election to expense or take bonus depreciation?
a. $2,100
b. $3,160
c. $4,400
d. $4,900
e. None of the above
62. Which one of the following is a Section 197 intangible?
a. Computer software available for purchase by the general public
b. A building
c. A stock investment
d. An interest-earning certificate of deposit
e. Goodwill
63. On January 1, 2014, Ted purchased a small software company for $200,000. He paid $110,000 for the fixed assets of the company and $90,000 for goodwill. How much amortization may Ted deduct on his 2014 tax return for the purchased goodwill?
a. $0
b. $3,000
c. $5,750
d. $6,000
e. $90,000
64. Section 197 intangibles:
a. Are amortized over a 15-year period.
b. Include goodwill, going-concern value, and information bases.
c. Were defined in the Revenue Reconciliation Act of 1993.
d. Are not amortized over the actual estimated useful life of the intangible asset.
e. All of the above are true.
65. Mark the correct answer. Section 197 intangibles:
a. Are amortized based on current fair market value rather than their actual cost.
b. Must be amortized over a 15 year life, regardless of their actual life.
c. Include intangible assets created and not purchased by the taxpayer.
d. Do not include purchased goodwill or going-concern value.
66. Which of the following is true with respect to the related party rules?
a. Bill sells stock to his sister for a $3,000 loss. Bill can deduct the loss on his tax return.
b. A taxpayer’s uncle is a related party for purposes of Section 267.
c. A disallowed loss on a related party transaction can be used to offset any future gain when the property is sold to an unrelated party.
d. Under the constructive ownership rules of Section 267, a shareholder owns 10 percent of the stock owned by a corporation in which he or she is a shareholder.
e. None of the above are true.
67. Mary sells to her father, Robert, her shares in AA Corp for $55,000. The shares cost Mary $80,000. How much loss may Mary claim from the sale?
a. $0
b. $25,000
c. $55,000
d. $80,000
e. None of the above is correct
68. Jerry and Julie are brother and sister. Jerry sold stock to Julie for $5,000, its fair market value. The stock cost Jerry $10,000 5 years ago. Also, Jerry sold Carol (an unrelated party) stock for $2,000 that cost $10,000 3 years ago. What is Jerry’s recognized loss before the $3,000 capital loss limitation?
a. $0
b. $8,000
c. $5,000
d. $13,000
e. $14,000
69. If a loss from sale or exchange of property between related parties is disallowed and the property is subsequently sold to an unrelated party,
a. An amended return may be filed to claim the loss previously disallowed.
b. The unrelated party may claim the loss previously disallowed.
c. The disallowed loss may be used to offset gain on the subsequent sale.
d. The disallowed loss may be used if there is a further loss on the subsequent sale.
e. The disallowed loss is lost forever.
