Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Regulation > Depreciation > Flashcards

Depreciation Flashcards

1
Q

What are the 2 types of property that uses MACRS depreciation?

A

Real property (1250) and tangible personal property (1245).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is real property?

A

Land and anything permanently affixed to land.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are the recovery periods of real property?

A

27.5 years for residential and 39 years for commercial.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Is land depreciable?

A

No b/c we assume land lives forever.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

How is real property depreciated?

A

S/L with a mid-month convention. 1/2 depreciation in first month and 1/2 in the last month.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What tangible real property uses S/L?

A

OTS software

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

How much is depreciated in the first year of real property?

A

11 1/2 months.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

How is tangible personal property depreciated?

A

DBB for 3/5/7 years and 150% for 15/20 years with a 1/2 year convention.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

When would the mid-quarter convention be used?

A

When 40% or more of the assets were purchased in the last quarter of the year.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What depreciation method is used for intangibles?

A

S/L amortization

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What are the 3 types of assets that may be held by a taxpayer?

A

Ordinary income assets, 1231 assets, and capital assets.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

How is the sale of a 1231 asset recorded?

A

An ordinary loss or a capital gain.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

How are non-business bad debt write offs treated?

A

Always as a ST capital loss.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

How are inherited assets treated?

A

Always considered LT.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is the maximum section 179 deduction?

A

$1M and is reduced dollar for dollar for any asset that is in excess of $2.5M.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

How much is bonus depreciation?

A

100% of the property after taking into account 179 depreciation.

17
Q

What is always a short-term capital loss?

A

Non-business bad debt write offs.

18
Q

What qualifies for double declining balance (200%)?

A

3, 5, 7, and 10 year property.

19
Q

What are 3 year property?

A

Small tools and OTS software.

20
Q

What are 5 year property?

A

Cars, light trucks, copiers, computers, and printers.

21
Q

What are 7 year property?

A

Equipment, office furniture, most other personal property.

22
Q

What qualifies for 150% declining balance?

A

15 and 20 year property.

23
Q

What qualifies as an intangible?

A

Acquired goodwill, franchises, trademarks, covenant not to compete, and customer-based intangibles.

24
Q

How are intangibles depreciated?

A

15 years S/L and $5k can be expensed immediately as an organization expense.

25
Q

What are the requirements of depreciating under Section 179?

A

The property must be purchased for use in the taxpayer’s active trade or business and must be purchased from an unrelated party.

26
Q

What type of equipment qualifies for bonus depreciation?

A

New or used equipment.

27
Q

Who does the unicap rules apply to?

A

Retailers w/avg gross receipts of $25M for the last 3 years.

28
Q

Who are considered related parties?

A

Husband/wife, sister/brother, parent/child, grandparent/grandchild, ancestor/dependent, majority shareholder/corporation, and majority partner/partnership

29
Q

Who are not considered related parties?

A

Aunts, uncles, cousins, nephews, nieces, and in-laws.

30
Q

Are losses to related parties deductible?

A

Losses to related parties are not deductible.

31
Q

What losses are recognized in a wash sale?

A

No losses are recognized in a wash sale, but is added back to the basis.

32
Q

What are capital assets?

A

All assets that are not ordinary or 1231 assets

33
Q

What are ordinary assets?

A

Inventory, business receivables, self-created art, asses used in a business for 1 year or less

34
Q

What are 1231 assets?

A

Depreciable/amortizable business assets or land over 1 year

35
Q

When is gain recognized in a like-kind exchange?

A

The lower of: 1) gain realized OR 2) total boot received, including net relief of liabilities

36
Q

What is the basis in new property in a like-kind exchange?

A

The FMV of the new property less any unrealized gain

37
Q

What are the involuntary conversion periods?

A

2 years for destruction/theft of property resulting in insurance recovery; 3 years for gov’t condemnation or eminent domain; 4 years for federally declared disasters

Regulation (12 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions