M5-Cost Recovery Flashcards
To qualify for IRC Section 179, the property must be tangible personal property acquired by purchase from an unrelated party for use in the active conduct of a trade or business. (true or false)
true
When a taxpayer places ____% or more of its property (other than certain qualifying real property) into service in the last quarter of the taxable year, the corporation must use the mid-quarter convention for MACRS depreciation purposes.
40%
With this method the acquisitions are segregated by quarter and treated as if placed in the middle of each respective quarter.
Nonresidential realty is depreciated over 39 years straight-line if placed in service after May 1993. (true or false)
true
MACRS 5-year property includes automobiles, light trucks, computers, typewriters, copiers, duplicating equipment, and other such items. (true or false)
True
A computer desk and office furniture are MACRS ____ year property, which includes office furniture and fixtures, equipment and property with no ADR midpoint classified elsewhere, and railroad track.
7 year
Under the MACRS method of depreciation for property placed in service after 1986, salvage value is ignored for purposes of computing the deduction. (true or false)
true
The half year convention provides that one-half of the first year’s depreciation is allowed in which the property is placed in service, regardless of when the property is placed in service during the year, and a half-year’s depreciation is allowed for the year in which the property is disposed of. (true or false)
true
Intangibles such as goodwill, licenses, franchises, trademarks and covenants not to compete may be authorized using the straight line basis over a period of 15 years, starting with the month of acquisition. (true or false)
True
Note, the difference for GAAP purposes: Intangible assets with indefinite lives are subject only to an impairment test, and intangible assets with finite lives are amortized over those lives and also subject to an impairment test.
A building will be classified as 39-year property if it were nonresidential real property and 27.5 year property if it were residential real property. (true or false)
true
