Questions from Federal Taxation

Q: Emily, who is single, sustains an NOL of $7

Emily, who is single, sustains an NOL of $7,800 in 2021. The loss is carried forward to 2022. For 2022, Emily’s income tax information before taking into account the 2021 NOL is as f...

Q: Hamlet acquires a 7-year class asset on November 23,

Hamlet acquires a 7-year class asset on November 23, 2021, for $100,000 (the only asset acquired during the year). Hamlet does not elect immediate expensing under § 179. He does not claim any availabl...

Q: Lopez acquired a building on June 1, 2016, for $

Lopez acquired a building on June 1, 2016, for $1,000,000. Calculate Lopez’s cost recovery deduction for 2021 if the building is: a. Classified as residential rental real estate. b. Classified as nonr...

Q: Andre acquired a computer on March 3, 2021, for $

Andre acquired a computer on March 3, 2021, for $2,800. He elects the straight-line method for cost recovery. Andre does not elect immediate expensing under § 179. He does not claim any available addi...

Q: Diana acquires, for $65,000, and places in

Diana acquires, for $65,000, and places in service a 5-year class asset on December 19, 2021. It is the only asset that Diana acquires during 2021. Diana does not elect immediate expensing under § 179...

Q: McKenzie purchased qualifying equipment for his business that cost $212,

McKenzie purchased qualifying equipment for his business that cost $212,000 in 2021. The taxable income of the business for the year is $5,600 before consideration of any § 179 deduction. a. Calculate...

Q: On April 5, 2021, Kinsey places in service a new

On April 5, 2021, Kinsey places in service a new automobile that cost $60,000. He does not elect $179 expensing, and he elects not to take any available additional first-year depreciation. The car is...

Q: On October 1, 2021, Verónica purchased a business. Of

On October 1, 2021, Verónica purchased a business. Of the purchase price, $60,000 is allocated to a patent and $375,000 is allocated to goodwill. Calculate Verónica’s 2021 § 197 amortization deduction...

Q: On March 25, Parscale Company purchases the rights to a mineral

On March 25, Parscale Company purchases the rights to a mineral interest for $8,000,000. At that time, the remaining recoverable units in the mineral interest are estimated to be 500,000 tons. If 80,0...

Q: In 2021, Larry and Susan each invest $10,000

In 2021, Larry and Susan each invest $10,000 in separate investment activities. They each incur deductible expenses of $800 associated with their respective investments. Explain why Larry’s expenses m...