General business data bank

| March 14, 2016

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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