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50. Deirdre’s business purchased two assets during the
current year. It placed in service computer equipment
(5-year property) on January 20 with a basis of $15,000 and
machinery (7-year property) on October
1 with a basis of $15,000. Calculate the maximum
depreciation expense, rounded to a whole number
(ignoring section 179 and bonus expensing):
A. $1,286
B. $5,144
C. $5,786
D. $6,000
E. None of the above
51. Suvi, Inc. purchased two assets during the current year.
It placed in service computer equipment (5-year
property) on August 10 with a basis of $20,000 and machinery
(7-year property) on November 18 with
a basis of $10,000. Calculate the maximum depreciation
expense, rounded to a whole number (ignoring
section 179 and bonus expensing):
A. $857
B. $3,357
C. $5,429
D. $6,000
E. None of the above
52. Wheeler LLC purchased two assets during the current
year. It placed in service computer equipment (5-
year property) on November 16 with a basis of $15,000 and
furniture (7-year property) on April 20 with
a basis of $11,000. Calculate the maximum depreciation
expense, rounding to a whole number (ignoring
section 179 and bonus expensing):
A. $1,285
B. $2,714
C. $4,572
D. $5,200
E. None of the above
53. Tasha LLC purchased furniture (7-year property) on April
20 with a basis of $20,000 and used the midquarter
convention. During the current year, which is the fourth
year Tasha LLC owned the property, the
property was disposed of on December 15. Calculate the
maximum depreciation expense, rounding to a
whole number:
A. $898
B. $2,095
C. $2,461
D. $2,394
E. None of the above
54. Anne LLC purchased computer equipment (5-year property)
on August 29 with a basis of $30,000 and
used the half-year convention. During the current year,
which is the fourth year Anne LLC owned the
property, the property was disposed of on January 15.
Calculate the maximum depreciation expense:
A. $432
B. $1,728
C. $1,874
D. $3,456
E. None of the above
55. Poplock LLC purchased a warehouse and land during the
current year for $350,000. The purchase price
was allocated as follows: $275,000 to the building and
$75,000 to the land. The property was placed
in service on August 12. Calculate Poplock’s maximum depreciation
for this first year, rounded to the
nearest whole number:
A. $2,648
B. $3,371
C. $3,751
D. $4,774
E. None of the above
56. Tom Tom LLC purchased a rental house and land during the
current year for $150,000. The purchase
price was allocated as follows: $100,000 to the building and
$50,000 to the land. The property was placed
in service on May 22. Calculate Tom Tom’s maximum
depreciation for this first year:
A. $1,605
B. $2,273
C. $2,408
D. $3,410
E. None of the above
57. Simmons LLC purchased an office building and land
several years ago for $250,000. The purchase price
was allocated as follows: $200,000 to the building and
$50,000 to the land. The property was placed
in service on October 2. If the property is disposed of on
February 27 during the 10th year, calculate
Simmons’ maximum depreciation in the 10th year:
A. $641
B. $909
C. $5,128
D. $7,346
E. None of the above
58. Lenter LLC placed in service on April 29, 2011 machinery
and equipment (7-year property) with a basis
of $600,000. Assume that Lenter has sufficient income to
avoid any limitations. Calculate the maximum
depreciation expense including section 179 expensing (but
ignoring bonus expensing):
A. $85,740
B. $120,000
C. $514,290
D. $585,740
E. None of the above
59. Littman LLC placed in service on July 29, 2011 machinery
and equipment (7-year property) with a
basis of $600,000. Littman’s income for the current year
before expensing was $100,000. Calculate the
maximum depreciation expense including section 179 expensing
(but ignoring bonus expensing):
A. 0.
B. $85,740.
C. $142,870.
D. $171,450.
E. None of the above.
60. Crouch LLC placed in service on May 19 machinery and
equipment (7-year property) with a basis of
$2,200,000. Assume that Crouch has sufficient income to
avoid any limitations. Calculate the maximum
depreciation expense including section 179 expensing (but
ignoring bonus expensing):
A. $314,380.
B. $440,000.
C. $571,510.
D. $742,930.
E. None of the above.
61. Clay LLC placed in service machinery and equipment
(7-year property) with a basis of $2,450,000 on
June 6, 2011. Assume that Clay has sufficient income to
avoid any limitations. Calculate the maximum
depreciation expense including section 179 expensing (ignoring
any possible bonus expensing), rounded
to a whole number:
A. $350,105
B. $392,960
C. $778,070
D. $864,395
E. None of the above
62. Bonnie Jo purchased a used computer (5-year property)
for use in her sole proprietorship. The basis of
the computer was $2,400. Bonnie Jo used the computer in her
business 60 percent of the time and used it
for personal purposes the rest of the time during the first
year. Calculate Bonnie Jo’s depreciation expense
during the first year assuming the sole proprietorship had a
loss during the year (Bonnie did not place the
property in service in the last quarter):
A. $240
B. $288
C. $480
D. $2,400
E. None of the above
63. Billie Bob purchased a used computer (5-year property)
for use in his sole proprietorship in the prior
year. The basis of the computer was $2,400. Billie Bob used
the computer in his business 60 percent
of the time during the first year. During the second year,
Billie Bob used the computer 40 percent
for business use. Calculate Billie Bob’s depreciation
expense during the second year assuming the
sole proprietorship had a loss during the year (Billie Bob
did not place the asset in service in the last
quarter):
A. $0
B. $48
C. $192
D. $336
E. None of the above
64. Potomac LLC purchased an automobile for $30,000 on
August 5th of 2011. What is Potomac’s
depreciation expense for 2011?
A. $3,060
B. $4,287
C. $6,000
D. $30,000
E. None of the above
65. Arlington LLC purchased an automobile for $40,000 on
July 5th of 2011. What is Arlington’s
depreciation expense for 2011 if its business use percentage
is 75 percent?
A. $2,295
B. $3,060
C. $6,000
D. $8,000
E. None of the above
66. Assume that Bethany acquires a competitor’s assets on
March 31st. The purchase price was $150,000.
Of that amount, $125,000 is allocated to tangible assets and
$25,000 is allocated to goodwill (a §197
intangible asset). What is Bethany’s amortization expense
for the current year, rounded to the nearest
whole number?
A. $0
B. $1,250
C. $1,319
D. $1,389
E. None of the above
67. Assume that Brittany acquires a competitor’s assets on
September 30th of the prior year. The purchase
price was $350,000. Of that amount, $300,000 is allocated to
tangible assets and $50,000 is allocated
equally to two §197 intangible assets (goodwill and a 1-year
non-compete agreement). Given, that the
non-compete agreement expires on September 30th of year 2,
what is Brittany’s amortization expense for
the second year, rounded to the nearest whole number?
A. $0
B. $1,667
C. $2,917
D. $3,333
E. None of the above
68. Jasmine started a new business in the current year. She
incurred $10,000 of start-up costs. How much of
the start-up costs can be immediately expensed for the year?
A. $0
B. $2,500
C. $5,000
D. $10,000
E. None of the above
69. Racine started a new business in the current year. She
incurred $52,000 of start-up costs. If her business
started on November 23rd of the current year, what is the
total expense she may deduct with respect to the
start-up costs for her initial year, rounded to the nearest
whole number?
A. $2,555.
B. $3,544.
C. $5,522.
D. $52,000.
E. None of the above.
70. Daschle LLC completed some research and development
during June of the current year. The related
costs were $60,000. If Daschle wants to capitalize and
amortize the costs as quickly as possible, what is
the total amortization expense Daschle may deduct during the
current year?
A. $0
B. $6,500
C. $7,000
D. $12,000
E. None of the above

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