51. Mark the correct answer. In calculating depreciation:
a. Straight-line depreciation is higher than double declining balance depreciation in the early years.
b. Straight-line depreciation is higher than double declining balance depreciation in the later years.
c. Double declining balance is a method of straight-line depreciation.
d. MACRS depreciation requires that salvage value be taken into account.
52. Mark the correct statement.
a. Residential real property is depreciated over 39 years.
b. Nonresidential real property is depreciated over 27.5 years.
c. Nonresidential real property is depreciated over 39 years.
d. Depreciation on real property starts at the beginning of the year in which the property is placed in service.
53. During 2014, Travis purchases $13,000 of used manufacturing equipment (7-year property) for use in his business, his only asset purchase that year. Travis has taxable income from his business of $500,000. What is the maximum amount that Travis may deduct under the election to expense?
a. $0
b. $13,000
c. $25,000
d. $500,000
e. None of the above
54. Aaron has a successful business with $50,000 of income in 2014. He purchased a new 7-year MACRS property with a cost of $7,000. For tax purposes, what is the largest write-off Aaron can obtain in 2014 for the new asset?
a. $500
b. $1,000
c. $3,500
d. $7,000
55. Taxpayers choosing the election to expense:
a. May depreciate the amount of the asset cost that exceeds the amount allowed under the election to expense.
b. Will have the maximum that can be expensed under the election reduced by $0.50 for each dollar by which the cost of the asset acquired exceeds a specified limit.
c. May not carry over any amounts elected which are not allowed because of taxable income limitations.
d. May expense a $125,000 automobile so long as it is used 100 percent for business.
56. On January 1, 2014, Sandy, a sole proprietor, purchased for use in her business a used production machine (7-year property) at a cost of $4,000. Sandy does not purchase any other property during 2014 and has net income from her business of $80,000. If the standard recovery period table would allow $572 of depreciation expense on the $4,000 of equipment purchased in 2014, what is Sandy's maximum depreciation deduction including the Section 179 election to expense (but not bonus depreciation) for 2014?
a. $572
b. $4,000
c. $4,572
d. $25,000
e. None of the above
57. What is the maximum depreciation expense deduction for Year 2 (2015) for a passenger automobile, used 100 percent for qualified business use, placed in service on June 15, 2014 and costing $14,000 (the election to expense is not made and no bonus depreciation was taken)?
a. $2,800
b. $3,160
c. $4,480
d. $5,100
e. None of the above
58. Jasper is a self-employed businessman. On March 5, 2014 he purchases a personal computer for use at his home. He uses the computer for personal purposes 50 percent of the time and for business use the remainder of the time. The computer cost $2,300. Jasper wants to claim the maximum amount of depreciation possible for 2014, including the election to expense, if it is available. What is the amount of depreciation that Jasper should claim on the computer for 2014?
a. $2,300
b. $1,150
c. $460
d. $230
e. Some amount less than the above amounts
59. On June 1, 2014, Sandalwood Corporation purchases a passenger automobile for 100 percent use in its business. The automobile is in the 5 year cost recovery class and has a basis for depreciation of $30,000. Assuming that the corporation elects the accelerated method of cost recovery for the asset and does not elect to expense any of its cost or take bonus depreciation, what is the total tax depreciation deduction for the 2014 calendar tax year (Year 1)?
a. $3,060
b. $3,160
c. $4,287
d. $6,000
e. None of the above
60. Which one of the following may not be depreciated using an accelerated method?
a. A farming tractor
b. A computer used strictly for the farming business
c. A corn-husking machine
d. A farm truck that is operated for personal use more than 50 percent of the time
e. All of the above items may be depreciated using an accelerated method
