Unformatted text preview: R 3-01 80. CPA-05549 Released 2007 Page 26
Rock Crab, Inc. purchases the following assets during the year:
Delivery van $3,000
25,000 What should be reported as the cost basis for MACRS five-year property?
Choice "c" is correct. MACRS 5-year property includes automobiles, light trucks, computers, typewriters,
copiers, duplicating equipment, and other such items. The cost basis of the MACRS 5-year property is
$28,000, calculated as follows:
MACRS 5-year $ 3,000
$28,000 Choice "a" is incorrect. While the computer ($3,000) is included, the delivery van ($25,000) is also 5-year
Choice "b" is incorrect. While the delivery van ($25,000) is included, the computer ($3,000) is also
MACRS 5-year property.
Choice "d" is incorrect. This answer option assumes that all of the assets in the question are MACRS 5year property. Ho...
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