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91. Olney LLC placed in service on July 19, 2011 machinery and
equipment (7-year property) with a basis
of $850,000. Assume that Olney has sufficient income to
avoid any limitations. Calculate the maximum
depreciation expense including section 179 expensing,
rounded to the nearest whole number (but ignoring
bonus expensing):
92. Columbia LLC placed in service on October 9, 2011
machinery and equipment (7-year property) with a
basis of $2,150,000. Assume that Columbia has sufficient
income to avoid any limitations. Calculate the
maximum depreciation expense including section 179 expensing
(but ignoring bonus expensing) for the
year, rounded to the nearest whole number:
93. In 2011, Northern LLC placed in service on September 6th
machinery and equipment (7-year property)
with a basis of $2,200,000. Assume that Northern has
sufficient income to avoid any limitations.
Calculate the maximum depreciation expense including section
179 expensing (ignore any potential
bonus expensing), rounded to the nearest whole number.
94. Assume that Reid has 2011 taxable income of $150,000
before any §179 expense and acquired the
following assets: he placed in service computer equipment
(5-year property) on August 6th with a basis
of $100,000 and machinery (7-year property) on November 9th
with a basis of $100,000. Calculate the
maximum depreciation expense including section 179 expensing
(but not bonus expensing).
95. Phyllis purchased $8,000 of specialized audio equipment
that she uses in her business regularly.
Occasionally, she uses the equipment for personal use.
During the first year, Phyllis used the equipment
for business use 70 percent of the time; however, during the
current (second) year the business use fell
to 40 percent. Assume that the equipment is seven-year MACRS
property and is under the half-year
convention. Assume the ADS recovery period is 10 years. What
is the depreciation allowance for the
current year, rounded to the nearest whole number?
96. Alexandra purchased a $35,000 automobile during 2011.
The business use was 70 percent. What is the
allowable depreciation for the current year?
97. Assume that Yuri acquires a competitor’s assets on May
1st. The purchase price was $500,000. Of the
amount, $325,000 is allocated to tangible assets and
$175,000 is allocated to goodwill (a §197 intangible
asset). What is Yuri’s amortization expense for the current
year, rounded to the nearest whole number?
98. Assume that Cannon LLC acquires a competitor’s assets on
June 15th of a prior year. The purchase price
was $450,000. Of the amount, $196,200 is allocated to
tangible assets and $253,800 is allocated to three
§197 intangible assets: $153,000 to goodwill, $50,400 to a
customer list with an expected life of 8 years,
and $50,400 to a 3 year non-compete agreement. On May 30th
of the second year, the customer list is
sold for $10,000. Please round your amortization amounts to
the nearest whole number. Round your
allocation percentage to the nearest whole percentage (e.g.,
.1234 as 12%)
1) What is Cannon’s amortization expense for the second
year?
2) What is the basis of the intangibles at the end of the
second year?
99. Oksana started an LLC on November 2 of the current year.
She incurred $30,000 of start-up costs. How
much of the start-up costs can be immediately expensed for
the year? How much amortization may
Oksana deduct in the first year?
100.Putin Corporation began business on September 23rd of
the current year. It incurred $40,000 of start-up
costs and $60,000 of organizational expenditures.
1) How much may be immediately expensed for the year?
2) How much amortization may be deducted in the first year,
rounded to the nearest whole number?
101.Paulsen incurred $55,000 of research and experimental
expenses and began amortizing them over 60
months during June of year 1. During May of year 3, Paulsen
received a patent based upon the research
being amortized. $36,000 of legal expenses for the patent
was incurred.
1) What is the basis of the patent, rounding amortization
for each year to the nearest whole number?
2) What is the amortization expense with respect to the
patent during the year it was issued, rounded to
the nearest whole number?
102.Sequoia purchased the rights to cut timber on several
tracts of land over a fifteen year period. It paid
$500,000 for cutting rights. A timber engineer estimates
that 500,000 board feet of timber will be cut.
During the current year, Sequoia cut 45,000 board feet of
timber, which it sold for $900,000. What is
Sequoia’s cost depletion expense for the current year?
103.PC Mine purchased a platinum deposit for $3,500,000. It
estimated it would extract 17,000 ounces of
platinum from the deposit. PC mined the platinum and sold it
reporting gross receipts of $500,000 and
$8 million for years 1 and 2, respectively. During years 1
and 2, PC reported net income (loss) from the
platinum deposit activity in the amount of ($100,000) and
$3,800,000, respectively. In years 1 and 2, PC
actually extracted 2,000 and 8,000 ounces of platinum. What
is PC’s depletion expense for years 1 and 2
if the applicable percentage depletion for platinum is 22
percent, rounded to the nearest whole number?

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