13.Property used for the production of income is not eligible for $ 179 expensin

Question

13.Property used for the production of income is not eligible for $ 179 expensing. True False 14. Goodwill associated with the acquisition of a business cannotbe amortized. True False ' 15.A purchased trademark is a § 197 intangible. True False 16.Cost depletion is determined by multiplying the depletion cost per unit by the number of units sold True False 17.Percentage depletion enables the taxpayer to recover more than the cost of an asset in the formof tax deductions. True False 18. Land is generally amortized, rather than being cost recoveredunder MACRS. True False 19. Grape Corporation purchased a machine in December of the current year. This was the only asset purchased during the current year. The machine was placed in service in January of the following year. No assets were purchased in the following year. Grape Corporation's cost recovery would begin: a. In the current year using a half-year convention. b. In the following year using a mid-quarter convention. C. In the following year using a half-year convention. d. In the current year using a mid-quarter convention e. None of these choices are correct. 20.On June 1 of the current year, Tab converted a machine from personal use to rental property. At the time of the conversion, the machine was worth $90,000. Five years ago Tab purchased the machine for $120,000. The machine is still encumbered by a $50,000 mortgage. What is the basis of the machine for cost recovery? a. $70,000 b. $120,000 C.$140,000 e. None of these choices are correct d. $90,000 21.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. Cost Recovery Cost Recovery Allowable If Tara sells the machine after three years for $15,000, how much gain should she recognize? a. $9,240 b. $11,480 C.$3,480 d. $6,360 e. None of these choices are correct.

Explanation / Answer

13. False, S.179 allows expensing the full expenditure of property used to produce income

14.True

15.True

16. False, Cost depletion=Depletion cost per unit*number units produced

16.

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