Questions from Taxation


Q: Assume that Congress enacted legislation requiring firms to capitalize advertising costs and

Assume that Congress enacted legislation requiring firms to capitalize advertising costs and amortize them over 20 years. Discuss the potential effects of such legislation on the amount of advertising...

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Q: Discuss the relationship between cost recovery deductions and cash flows.

Discuss the relationship between cost recovery deductions and cash flows.

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Q: National governments have the authority to print their own currency. Why

National governments have the authority to print their own currency. Why might governments be reluctant to finance an operating deficit (excess of spending over revenues) simply by printing more money...

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Q: Erwin Company, a calendar year taxpayer, made only two purchases

Erwin Company, a calendar year taxpayer, made only two purchases of depreciable personality this year. The first purchase was five-year recovery property costing $312,800, and the second purchase was...

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Q: To what extent do cost recovery deductions based on the capitalized cost

To what extent do cost recovery deductions based on the capitalized cost of a tangible asset reflect a decline in the economic value of that asset?

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Q: Can a firm have a negative tax basis in an asset?

Can a firm have a negative tax basis in an asset?

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Q: If the tax law did not allow farming businesses to deduct soil

If the tax law did not allow farming businesses to deduct soil and water conservation expenditures but required capitalization of these costs, in what year or years would farmers recover these costs?...

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Q: BBB Company, which manufactures industrial plastics, owns the following assets

BBB Company, which manufactures industrial plastics, owns the following assets. Characterize each asset as either a capital, ordinary, or Section 1231 asset. a. A computer system used in BBB’s main of...

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Q: Mr. K realized a loss on the sale of an asset

Mr. K realized a loss on the sale of an asset to Mr. P, his best friend for 20 years. Does this sale represent an arm’s-length transaction? Are Mr. K and Mr. P related parties for tax purposes?

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Q: Does a taxpayer always realize a loss on the involuntary disposition of

Does a taxpayer always realize a loss on the involuntary disposition of property because of a casualty or a theft?

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