Capital Expenditures

Question 1

Cap Expenditures

Answer 1

263when do you get to deduct

Question 2

expense items

Answer 2

deduct immediately

Question 3

capital expenditures

Answer 3

263 add to bases of some asset, no immediate deduction

Question 4

theory on deduction or not

Answer 4

i. 1000 out of savings to buy equipment:
1. Acct says capital expenditure, long life to product income for years
2. Economist says no deduction because no change in economic income. Just moved cash to property.

Question 5

the 100 purchase…

Answer 5

creates a bases of 100 in the property

Question 6

Tangible proper regs

Answer 6

1. 263 (2) (1), (2), (3)

1. 162- (3)(4)

Question 7

Intangible Property

Answer 7

1.126(a)(4)

Question 8

Theory on cap exp

Answer 8

doesnt reduce EI just mvoes wealth from cash to property, so no deduction

Question 9

general rule

Answer 9

Cap amt paid to accrue or produce tangible proper 1.263 a -4 (land buildings, equipment)

Question 10

improvements to tangible proper

Answer 10

capitalzied 1.26 a -3

Question 11

improvements

Answer 11

capitalized, bases stays same so you make up on sale if no repair

Question 12

repairs

Answer 12

deduction at time of repair

1.162-4

Question 13

types of improvements

Answer 13

a. Betterment- 1.263a 3 1 i
i. No material increase in produciton
b. Restoration – 1.263 a 2 k v
i. Not substantial main component
c. Adapt to new or different use

Question 14

Replacing Roof is a

Answer 14

betterment (Capitalized)