Chapter 8

Question 1

What is personalty vs realty

Answer 1

Realty is real property (land). Personalty is personal property

Question 2

What is the half-year convention

Answer 2

Assets treated as if placed in service or disposed of in middle of year regardless of actual P.I.S date

Question 3

If you buy a truck on March 15th, which convention is used

Answer 3

Half-year convention. Gets treated as if placed in service July 1 of year 1

Question 4

What is the mid-quarter convention

Answer 4

MQ applies when >40% of personalty is PIS during last quarter of year. If you are on MQ for any asset acquired in year X, you are on MQ for ALL assets acquired in year x

Question 5

Tax uses which method of depreciation

Answer 5

Double declining balance (1/useful-life)*2

Question 6

What is Sec 179?

Answer 6

Allows you to immediately expense an asset allowing for big TVM savings. This is a temporary BTD