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 71

Essay

Review LaterAdd Note

Review Later

Discuss the reason for the inclusion amount with respect to leased automobiles.

Correct Answer

verified

The purpose of the inclusion a...

View Answer

Show Answer

Question 72

True/False

Review LaterAdd Note

Review Later

Under the MACRS straight-line election for personalty, only the half-year convention is applicable.

A) True
B) False

Correct Answer

verified

Show Answer

Question 73

Multiple Choice

Review LaterAdd Note

Which of the following may be deductible in 2018?

On June 1, 2018, Irene places in service a new automobile that cost $21,000.The car is used 70% for business and 30% for personal use.Assume this percentage is maintained for the life of the car.) She does not take additional first-year depreciation.Determine the cost recovery deduction for 2019.

Bhaskar purchased a new factory building and land on September 10, 2018, for $3,700,000.$500,000 of the purchase price was allocated to the land.) He elected the alternative depreciation system ADS) .Determine the cost recovery deduction for 2019.

Beige, Inc., an airline manufacturer, is conducting negotiations for the sale of military aircraft.One negotiation is with a U.S.assistant secretary of defense.She can close the deal on the purchase of 50 attack helicopters if she is paid $750,000 under the table.Another negotiation is with the minister of defense of a third world country.To complete the sale of 20 jet fighters to his government, he demands that he be paid a $1 million grease payment.Beige makes the payments and closes the deals.How much of these payments are deductible by Beige, Inc.?

Discuss the beneficial tax consequences of an SUV not being classified as a passenger automobile.

A purchased trademark is a § 197 intangible.

Intangible drilling costs must be capitalized and recovered through depletion.

When a business is being purchased, if possible, the purchaser should bargain for more of the purchase price being allocated to goodwill and covenants not to compete, rather than depreciable assets.

All domestic bribes i.e., to a U.S.official) are disallowed as deductions.

The limitation on the deduction of business interest does not apply to noncorporate taxpayers.

Property used for the production of income is not eligible for § 179 expensing.

Kitty runs a brothel illegal under state law) and has the following items of income and expense.What is the amount that she must include in taxable income from her operation?

Investigation of a business unrelated to one's present business never results in a current period deduction of the entire amount if the amount of the investigation expenses exceeds $5,000.

MACRS depreciation is used to compute earnings and profits.

Taxpayers may elect to use the straight-line method under MACRS for personalty.

On June 1, 2018, James places in service a new automobile that cost $40,000.The car is used 60% for business and 40% for personal use.Assume this percentage is maintained for the life of the car.) James does not take additional first-year depreciation.Determine the cost recovery deduction for 2018.

Ordinary and necessary business expenses, other than cost of goods sold, of an illegal drug trafficking business do not reduce taxable income.

On July 17, 2018, Kevin places in service a used automobile that cost $25,000.The car is used 80% for business and 20% for personal use.In 2019, he used the automobile 40% for business and 60% for personal use.Determine the cost recovery recapture for 2019.