Quanti co., a calendar-year taxpayer, purchased small tools for $5,000 on decemb

Question

Quanti co., a calendar-year taxpayer, purchased small tools for $5,000 on december 21, 20X14, representing the company's only purchase of tangible personal property that took place during 20X14. On its 20X14 tax retum, how many months of MACRS depreciation may Quanti Co. claim on the tools? One-and-a-half moths Six moths One month None Which of the following is correct about depreciation under federal tax law? The recovery period is longer than the useful life of the asset. There are different recovery periods for new and used property. Salvage values are ignored. I and II only III only II only I, II, and III Joe purchased a van on February 1, 20X4 for use in his business, Crew, Airport Transport. The van was purchased for $30,000, has an estimated useful life of 10 years, and a salvage value of $2,000. No other assets were put into service that year. What is Joe's MACRS deprectation for the van in 20X4? $2,567 $10,500 $6,000 $10,267 Dolly purchased and placed into service qualifying depreciable property in 20x4 at a total cost of $2,250,000. Dolly has elected to take the Section 179 deduction. What is Dolly's Section 179 deduction for 20x4? $0 $500,000 $250,000 $1,750,000

Explanation / Answer

1)MACRS involves applying the half-year conventon under which assts are amortzed for ½ year in the year of acquisiton and in the year of disposal. here the mid-quarter conventon is applied under which depreciaton is calculated only for ½ of the last quarter of the year and it is 1 and half month. Option A

2)The recovery periods is always shorter than the useful life of the asse±s to which they are applied.
The same recovery periods are used for new assets and for used assets and salvage value is ignored.

Option C is corretc

3) Here we use double decline depreciation method for cars have 5 year recovery period and we ignroe the salvage value and half year convention

rate is 1/5=20%*2=40%

depreciation=30000*40%*.5=6000

Option b

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