Questions from General Taxation


Q: On November 4, 2013, Blue Company acquired an asset (

On November 4, 2013, Blue Company acquired an asset (27.5-year residential real property) for $200,000 for use in its business. In 2013 and 2014, respectively, Blue took $642 and $5,128 of cost recove...

See Answer

Q: Debra acquired the following new assets during 2015. /

Debra acquired the following new assets during 2015. Determine Debra’s cost recovery deductions for the current year. Debra does not elect immediate expensing under § 179...

See Answer

Q: Lori, who is single, purchased 5-year class property

Lori, who is single, purchased 5-year class property for $200,000 and 7-year class property for $400,000 on May 20, 2015. Lori expects the taxable income derived from her business (without regard to t...

See Answer

Q: Olga is the proprietor of a small business. In 2015,

Olga is the proprietor of a small business. In 2015, the business’s income, before consideration of any cost recovery or § 179 deduction, is $250,000. Olga spends $600,000 on new 7-year class assets a...

See Answer

Q: Jabari Johnson is considering acquiring an automobile at the beginning of 2015

Jabari Johnson is considering acquiring an automobile at the beginning of 2015 that he will use 100% of the time as a taxi. The purchase price of the automobile is $35,000. Johnson has heard of cost r...

See Answer

Q: On October 15, 2015, Jon purchased and placed in service

On October 15, 2015, Jon purchased and placed in service a used car. The purchase price was $25,000. This was the only business-use asset Jon acquired in 2015. He used the car 80% of the time for busi...

See Answer

Q: On June 5, 2014, Leo purchased and placed in service

On June 5, 2014, Leo purchased and placed in service a new car that cost $20,000. The business-use percentage for the car is always 100%. Leo claims any available additional first-year depreciation. C...

See Answer

Q: On May 28, 2015, Mary purchased and placed in service

On May 28, 2015, Mary purchased and placed in service a new $20,000 car. The car was used 60% for business, 20% for production of income, and 20% for personal use in 2015. In 2016, the usage changed t...

See Answer

Q: Jamie purchased $100,000 of new office furniture for her

Jamie purchased $100,000 of new office furniture for her business in June of the current year. Jamie understands that if she elects to use ADS to compute her regular income tax, there will be no diffe...

See Answer

Q: Martin transfers real estate with an adjusted basis of $260,

Martin transfers real estate with an adjusted basis of $260,000 and fair market value of $350,000 to a newly formed corporation in exchange for 100% of the stock. The corporation assumes the liability...

See Answer