Is a deduction allowed under the MACRS rules for depreciable real estate (used in a business or held for investment) in the year the property is sold? If so, explain how it is calculated.
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- Which of the following statements with respect to the depreciation of property under MACRS is incorrect? Under the half-year convention, one-half year of depreciation is allowed in the year the property is placed in service. If a taxpayer elects to use the straight-line method of depreciation for property in the 5 -year class, all other 5 -year class property acquired during the year must also be depreciated using the straight-line method. In some cases, when a taxpayer places a significant amount of property in service during the last quarter of the year, real property must be depreciated using a mid-quarter convention. Real property acquired after 1986 must be depreciated using the straight-line method. The cost of property to which the MACRS rate is applied is not reduced for estimated salvage value.Would you please explain how to find the minimum taxable capital gain to be reported in Year 2? sold capital property in Year 1 for net proceeds of $500,000. The property has an adjusted cost base of $100,000. C received $200,000 at the time of the sale and a note for the balance to be paid in equal annual instalments over the following three years. What is the minimum taxable capital gain to be reported in Year 2?What would be the tax treatment of a superficial loss? a. Permanently denied. b. Immediately deductible. c. Deducted from the adjusted cost base (ACB) of the reacquired property. d. Added to the ACB of the reacquired property for the purposes of determining the future capital gain or loss when the property was sold.
- Depreciation on rental property is an A. expense deductible against income B. out-of-pocket expense to the owner. C. Item which must be capitalized. D. Itemized one-time deduction.Which method will produce the highest charge to income in year 4? Which method will produce the highest book value for the asset at the end of year 3? If the asset is sold at the end of year 3, which method would yield the highest gain (or lowest loss) on disposal of the asset?Select all items which are correct. Land is listed on the depreciation schedule although it is not depreciated because it is an asset. Land is listed on the depreciation schedule because land is an asset depreciated- like buildings and equipment. Under both GAAP and tax law, depreciation of an asset begins when the asset has been acquired and placed in service. Under both GAAP and tax law, depreciation of an asset begins when the asset has been acquired- no matter if the asset has been placed in service.
- 30. The book value of a plant asset is A) equal to the balance of the related accumulated depreciation account. B) the assessed value of the asset for property tax purposes. C) the asset's acquisition cost less the total related depreciation recorded to date. D) the fair market value of the asset at a balance sheet date.Which of the following transactions would most likely be a deductible repair under s 25-10? a. Repair of damage to property that existed at the time of purchase but was not known to the purchaser. b. Repainting a rental property after purchase but before tenants move in. c. Repainting a rental property in-between tenants vacating and new tenants moving in. d. Mechanical repairs to a vehicle that was not drivable at the time of purchase.32. Under MACRS, which one of the following is not considered in determining depreciation for tax purposes? A) Half-year convention B) Cost of asset C) Salvage value D) Property class
- 26. What is the general formula for calculating the gain or loss realized on the sale or other disposition of property? Include in your answer a discussion of how to calculate each "element" of the formula for calculating gain or loss realized, assuming that the property is purchased at original cost. Also, discuss common circumstances where the basis of property is "adjusted" over time.Suppose the IRS has decided to institute a new MACRSGDS property class of only 2 years. It will follow the usual depreciation conventions, determined in the same way as 3-, 5-, 7-, and 10-year property. Determine the yearly MACRS-GDS percentages for each year.How are intangible assets with an indefinite life treated? A. They are depreciated. B. They are amortized. C. They are depleted. D. They are tested yearly for impairment.