ACCT 321 Homework -
Q1. Hazel purchased a new business asset (five-year asset) on September 30, 2013, at a cost of $100,000. On October 4, 2013, Hazel placed the asset in service. This was the only asset Hazel placed in service in 2013. The only election with respect to the asset was not to take § 179. On August 20, 2014, Hazel sold the asset. Determine the cost recovery for 2014 for the asset.
Q2. TEAL Company acquires a new machine (ten-year property) on January 15, 2013, at a cost of $200,000. TEAL also acquires another new machine (seven-year property) on November 5, 2013, at a cost of $40,000. No election is made to use the straight-line method. The company does not make the § 179 election. TEAL takes additional first-year depreciation. Determine the total deductions in calculating taxable income related to the machines for 2013.
Q3. Annie purchased office furniture on September 20, 2013, for $100,000. On October 10, she purchased business computers for $80,000. Annie did not elect to expense any of the assets under § 179, nor did she elect straight-line cost recovery. She did not take additional first-year depreciation. Determine the cost recovery deduction for the business assets for 2013.
Q4. Derek purchased a factory building on November 15, 1994, for $5,000,000. He sells the factory building on February 2, 2013. Determine the cost recovery deduction for the year of the sale.
Q5. The only asset Bill purchased during 2013 was a new seven-year class asset. The asset, which was listed property, was acquired on June 17 at a cost of $50,000. The asset was used 40% for business, 30% for the production of income, and the rest of the time for personal use. Bill always elects to expense the maximum amount under § 179 whenever it is applicable. The net income from the business before the § 179 deduction is $100,000. Determine Bill's maximum deduction with respect to the property for 2013.
Q6. Nova purchased a new automobile (listed property) on July 20, 2012, for $29,000. The car was used 60% for business and 40% for personal use. In 2013, the car was used 30% for business and 70% for personal use. Nova elects not to take additional first-year depreciation. Determine the cost recovery recapture for 2013.
Q7. Meg rents her beach house for 60 days and uses it for personal use for 30 days during the year. The rental income is $6,000 and the expenses are as follows:
|
Mortgage interest
|
$9,000
|
|
Real estate taxes
|
3,000
|
|
Utilities
|
2,000
|
|
Maintenance
|
1,000
|
|
Insurance
|
500
|
|
Depreciation (rental part)
|
4,000
|
Using the IRS approach, calculate Meg's allowable deductions for her beach house.
Q8. Bryce raises various plants and flowers in a small greenhouse constructed specifically for that purpose. During the current year, Bryce reports gross income from the greenhouse activities of $1,700. Bryce also incurs the following expenses:
|
Utilities
|
$300
|
|
Property taxes on the greenhouse
|
1,150
|
|
Depreciation (assuming the activity is considered to be a hobby)
|
800
|
Compute the amount of depreciation Bryce may take. [10 points]
Q9. Jessica, single, had the following items for 2013:
|
Salary
|
$44,000
|
|
§ 1244 loss on stock acquired 3 years ago
|
(70,000)
|
|
§ 1244 gain on stock acquired 10 months ago
|
26,000
|
|
Worthless security purchased in June of last year
|
(4,000)
|
|
Nonbusiness bad debt
|
(7,000)
|
|
Interest income
|
8,000
|
Compute Jessica's adjusted gross income for 2013.
Q10. In 2013, Lily had the following items:
|
Salary
|
$40,000
|
|
Interest income from City of Pleasant Valley bond
|
480
|
|
Personal use casualty gain
|
9,000
|
|
Personal use casualty loss (after $100 floor)
|
18,000
|
|
Other itemized deductions
|
3,000
|
Additional information:
- Lily's filing status is "single".
- Number of personal exemption --- 1
Calculate Lily's taxable income for 2013.