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1. The concept of depreciation assumes that the asset has a determinable useful life. *a. True b. False 2. The basis of cost recovery property must be reduced by the cost recovery allowed. a. True *b. False 3. Antiques may be eligible for cost recovery if they are used in a trade or business. a. True *b. False 4. The key date for calculating cost recovery is the date the asset is purchased. a. True *b. False 5. Land improvements are generally eligible for cost recovery. *a. True b. False 6. The cost recovery basis for property converted from personal use to business use is the fair market value of the property at the time of the conversion. a. True *b. False 7. The cost recovery method for some personal property under MACRS is 150% declining balance. *a. True b. False 8. If 150% declining-balance is used, there is no straight-line switchover. a. True *b. False
9. Under the MACRS mid-quarter convention, an asset sold on December 10 will be treated as though it were sold on November 15 for a calendar year taxpayer. *a. True b. False 10. If more than 40% of the value of property, other than real property, is placed in service during the last quarter, all of the property will be allowed 1.5 months of cost recovery. a. True *b. False 11. Under MACRS, if the mid-quarter convention is applicable, all property sold is treated as being sold at the mid-point of the quarter in which it is placed in service. a. True *b. False 12. All eligible real estate under MACRS is permitted a full month of cost recovery in the month of disposition. a. True *b. False 13. Residential rental real estate includes property where 80% or more of the net rental revenues are from nontransient dwelling units. a. True *b. False 14. Motel buildings are classified as residential rental real estate. a. True *b. False 15. Taxpayers may elect to use the straight-line method under MACRS for personalty. *a. True b. False 16. Under the MACRS straight-line election for personalty, the mid-
quarter convention is applicable. *a. True b. False 17. The cost recovery period for new farm equipment placed in service during 2011 is seven years. *a. True b. False 18. In a farming business, MACRS straight-line cost recovery is required for all fruit bearing trees. *a. True b. False 19. In a farming business, if the uniform capitalization rules apply, cost is recovered using the ADS straight-line method. a. True *b. False 20. When lessor owned leasehold improvements are abandoned because of the termination of the lease, a loss can be taken for the unrecovered basis. *a. True b. False 21. The costs of leasehold improvements owned by the lessee on residential rental real estate are recovered over a 27.5-year MACRS recovery period. *a. True
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