A taxpayer places a $50,000 5-year recovery period asset (not an auto) in service in 2021. This is the only asset placed in service in 2021. Assuming no special elections (for example, election to expense), what is the amount of total cost recovery deduction? a. $25,000 b. $5,000 c. $30,000 Od. $0 e. $50,000

A taxpayer places a $50,000 5-year recovery period asset (not an auto) in service in 2021. This is the only asset placed in service in 2021. Assuming no special elections (for example, election to expense), what is the amount of total cost recovery deduction? a. $25,000 b. $5,000 c. $30,000 Od. $0 e. $50,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Q. Diana acquires, for $120,800, and places in service a 5-year class asset on December 19, 2021. It is the only asset that Diana acquires in 2021. Diana does not elect immediate expensing under § 179. She elects additional first-year deprecation. Calculate Diana's total cost recovery deduction for 2021.
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Review Examples 50 and 52 (Section 1231 Computations) in the text. In both examples, the taxpayer's AGI is $129,400 even though in Example 52 there is $700 of nonrecaptured § 1231 loss from 2018. As part of the § 1231 lookback provision any net gain is______(either added to or offset against) any ______(either, nonrecaptured net § 1231 losses or recaptured net § 1231 losses) from the______ (either two three or five) prior tax years. Therefore, the $700 from 2018 results in part of the 2019 net § 1231 gain to be treated as_______(either a capital gain a nontaxable gain or ordinary income) Please fill in the blanks?
A taxpayer places a $1,050,000 5-year recovery period asset in service in 2020. This is the only asset placed in service in 2020. Assuming half-year convention, an election to expense under Section 179, and no income limitation, what is the amount of total cost recovery deduction (no bonus depreciation)? a.$210,000 b.$1,040,000 c.$1,026,000 d.$1,050,000 e.$1,042,000
Ayres Services acquired an asset for $80 million in 2024. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2024, 2025, 2026, and 2027 are as follows: Pretax accounting income Depreciation on the income statement Depreciation on the tax return Taxable income Required: 2024 $ 330 20 (25) $325 Cumulative Temporary Difference Deferred Tax Liability ($ in millions) 2025 $350 20 (33) $337 2026 $365 20 (15) $370 $413 Beginning of 2024 2027 $ 400 For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. Note: Leave no cell blank, enter "0" wherever applicable. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000…
4. A company establishes a depreciation account for an asset that is classified as Sec.1245property. The account is based on the MACRS with a life of seven years and an initial cost of$100,000. Without considerable of the sale of this asset, the company's taxable income is$400,000. Determine the following if the asset is sold after 5 years: a. The federal tax liability if the asset is sold for$15,000. b. The federal tax liability if the asset is sold for$160,000. c. The federal tax liability if the asset is sold for$90,000.
H6. A taxpayer places a $53,000 5-year recovery period asset (not an auto) in service in 2022. This is the only asset placed in service in 2022. Assuming no special elections (e.g., election to expense), what is the amount of total cost recovery deduction? a. $17,490 b. $53,000 c. $10,600 d. $5,300
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In 2021, Peter Quill had a 5 179 deduction carryover of $40,000. In 2022, Peter elected 5 179 for an asset acquired at a cost of $120,000. Peter's $ 179 business income imitation for 2022 is $130.000. Determine Peter's § 179 deduction for 2022 O a $25,000 Ob $115,000 Oc$130,000 Od $140,000
Tt4.
In 2020, Taxpayer sold machinery used in its business for its fair value of $160,000 to an unrelated party who agreed to pay $40,000 in 2020 plus $40,000 per year (plus adequate interest) in June of the next three years. The machinery had an initial basis of $120,000 and accumulated depreciation of $62,400 through the date of sale. Determine the total gain Taxpayer must recognize in 2020 under the installment method.
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