Taxationforindividuals Ch 9

In: Business and Management

Submitted By jberard
Words 18014
Pages 73
Chapter 09
Property Acquisition and Cost Recovery

True / False Questions 1. | Like financial accounting, most business property must be capitalized for tax purposes. True False | 2. | Tax cost recovery methods include depreciation, amortization, and depletion. True False | 3. | If a business mistakenly claims too little depreciation, the business must only reduce the asset's basis by the depreciation actually taken rather than the amount of the allowable depreciation. True False | 4. | An asset's capitalized cost basis includes only the actual purchase price; whereas the other expenses associated with the asset are immediately expensed. True False | 5. | The basis for a personal use asset converted to business use is the lesser of the asset's cost basis or fair market value on the date of the transfer or conversion. True False | 6. | Depreciation is currently computed under the Modified Accelerated Cost Recovery System (MACRS). True False | 7. | The 200 percent or double declining balance method is allowable for five and seven year property. True False | 8. | Taxpayers may use historical data to determine the recovery period for tax depreciation. True False | 9. | Taxpayers use the half-year convention for all assets. True False | 10. | If a taxpayer places only one asset (a building) in service during the fourth quarter of the year, the mid-quarter convention must be used. True False | 11. | The MACRS depreciation tables automatically switch to the straight-line method when it exceeds the declining balance method. True False | 12. | If tangible personal property is depreciated using the half-year convention and is disposed of during the first quarter of a subsequent year, the taxpayer must use the mid-quarter…...

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