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Exam 2: Property Acquisition and Cost Recovery

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Question 51

Multiple Choice

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Which is not an allowable method under MACRS?

A) 150 percent declining balance
B) 200 percent declining balance
C) Straight-line
D) Sum-of-the-years'-digits
E) All of the choices are allowable methods under MACRS.

F) C) and E)
G) A) and E)

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Question 52

Multiple Choice

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Which depreciation convention is the general rule for tangible personal property?

A) Full-month
B) Half-year
C) Mid-month
D) Mid-quarter
E) None of the choices are conventions for tangible personal property.

F) C) and D)
G) A) and B)

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Question 53

True/False

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Business assets that tend to be used for both business and personal purposes are referred to as listed property.

Which of the following would be considered an improvement rather than routine maintenance?

Bonnie Jo purchased a used camera (five-year property) for use in her sole proprietorship. The basis of the camera was $2,600. Bonnie Jo used the camera 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 deduction 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.)

The alternative depreciation system requires both a slower method of recovery and longer recovery periods.