1. On June 1, 2014, Sam purchased used farm machinery for $150,000. Sam used the
machinery in connection with his farming business. Sam does not elect to expense assets
under 179. Sam has, however, made an election to not have the uniform capitalization
1. On January 15, 2014, Vern purchased the rights to a mineral interest for $3,500,000. At
that time it was estimated that the recoverable units would be 500,000. During the year,
40,000 units were mined and 25,000 units were sold for $800,000. Vern incur
1. On July 10, 2014, Ariff places in service a new sports utility vehicle that cost $70,000 and
weighed 6,300 pounds. The SUV is used 100% for business. Determine Ariffs maximum
deduction for 2014, assuming Ariffs 179 business income is $110,000. Ariff do
1. White Company acquires a new machine (seven-year property) on January 10, 2013, at a
cost of $600,000. White makes the election to expense the maximum amount under 179.
No election is made to use the straightline method. White does take additional firs
1. Tara purchased a machine for $40,000 to be used in her business. The cost recovery
allowed and allowable for the three years the machine was used are as follows:
Cost Recovery Allowed
Cost Recovery Allowable
1. Carlos purchased an apartment building on November 16, 2014, for $3,000,000.
Determine the cost recovery for 2015.
e. None of these
RATIONALE: $3,000,000 .00455 = $13,650.
2. Diane purchased a factor
1. Bonnie purchased a new business asset (five-year property) on March 10, 2013, at a cost
of $30,000. She also purchased a new business asset (seven-year property) on November
20, 2013, at a cost of $13,000. Bonnie did not elect to expense either of the
1. Hans purchased a new passenger automobile on August 17, 2014, for $30,000. During the
year the car was used 40% for business and 60% for personal use. Determine his cost
recovery deduction for the car for 2014.
1. If an automobile is placed in service in 2014, the limitation for cost recovery in 2016 will
be based on the cost recovery limits for the year 2014.
RATIONALE: The limits will be based on the limits for automobiles placed
1. If startup expenses total $53,000 in 2014, $51,000 is amortized over 180 months.
RATIONALE: A portion of the expenses ($2,000) can be deducted immediately (a $5,000
maximum less the amount of startup expenses in excess of