Property Taxes (R2)

Question 1

section 179

Answer 1

-non residental only; not residental
-max deduction: 1,220,000 in a year
-cannot use section 179 to make a loss, or if you already have a NOL - so limited to taxable income, if it is less than the equipment bought
-does not apply to land
-if equipment is over $3,050,000 then dollar for dollar phase out, so difference between this amount and amount of equipment is subtracted from the max deduction to equal amount you can 179 this year *pay attention it does not create a loss

Question 2

using section 179 for qualified improvements - called “qualified improvement property”

Answer 2

for interior of nonresidental property and must be after building was placed into service - so can fully deduct alarm system being added

Question 3

how much income to record for inherited property or stock

Answer 3

there is no income tax on the value of something inherited - gain would be the difference between selling price and basis

Question 4

how are losses on personal assets treated

Answer 4

they are not deductible

Question 5

deminis safe harbour rule

Answer 5

allows to deduct up to $5,000 per item - can be expensed and deducted

Question 6

when personal property is being moved to business property, what is the tax basis for depreciation

Answer 6

the FMV at date of conversion

Question 7

when personal property is being moved to business property, what is the depreciation basis of property

Answer 7

lesser of: (1) the original cost basis, as adjusted for any improvements to the property; or (2) the FMV of the property on the date of conversion.

Question 8

personal property convention

Answer 8

half year * unless 40% was placed into service in last quarter of year then mid quater

Question 9

real property (non res or res buildings)

Answer 9

always use mid month