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28. On March 1, 2014, Lana leases and places in service a passenger automobile. The lease will run for five years and the payments are $500 per month. During 2014, she uses her car 60% for business and 40% for personal activities. Assuming the dollar amount from the IRS table is $20, determine Lana’s inclusion as a result of the lease.a. $0b. $10c. $17d. $20e. None of theseANSWER:bRATIONALE: $20 ×306/365 ×60% = $10.29. On June 1, 2014, Norm leases a taxi and places it in service. The lease payments are $1,000 per month. Assuming the dollar amount from the IRS table is $241, determine Norm’s inclusion amount.
Chapter 8: 30. Bhaskar purchased a new factory building on September 10, 2014, for $3,700,000. Five hundred thousand of the purchase price was allocated to the land. He elected the alternative depreciation system (ADS). Determine the cost recovery deduction for 2015.31. Pat purchased a used five-year class asset on March 15, 2014, for $60,000. He did not elect § 179 expensing.Determine the cost recovery deduction for 2014 for earnings and profits purposes.32. George purchases used sevenyear class property at a cost of $200,000 on April 20, 2014. Determine George’s cost recovery deduction for 2014 for alternative minimum tax purposes, assuming George does not elect § 179.a. $2,500b. $10,000c. $14,280d. $28,580e. None of theseANSWER: eRATIONALE: .1071 ×$200,000 = $21,420.33. During the past two years, through extensive advertising and improved customer relations, Orange Corporation estimated that it had developed customer goodwill worth $500,000. For the current year, determine the amount of goodwill Orange Corporation may amortize.
Chapter 8: ANSWER: eRATIONALE: Selfcreated goodwill is not a § 197 intangible and thus cannot be amortized.34. On June 1, 2014, Red Corporation purchased an existing business. With respect to the acquired assets of the business, Red allocated $300,000 of the purchase price to a patent. The patent will expire in 20 years. Determine the total amount that Red may amortize for 2014 for the patent.