CHAPTER 8 DEPRECIATION, COST RECOVERY, AMORTIZATION, AND DEPLETION

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1. Property which is classified as personalty may be depreciated.

a. True

b. False

2. The basis of cost recovery property must be reduced by at least the cost recovery allowable.

a. True

b. False

3. Antiques may be eligible for cost recovery if they are used in a trade or business.

a. True

b. False

4. The key date for calculating cost recovery is the date the asset is placed in service.

a. True

b. False

5. Land improvements are generally not eligible for cost recovery.

a. True

b. False

6. The cost recovery basis for property converted from personal use to business use may be the fair market value of the property at the time of the conversion.

a. True

b. False

7. The maximum cost recovery method for all personal property under MACRS is 150% declining balance.

a. True

b. False

8. The cost recovery period for 3-year class property is 4 years.

a. True

b. False

9. All personal property placed in service in 2013 and used in a trade or business qualifies for additional first-year depreciation.

a. True

b. False

.

10.If more than 40% of the value of property, other than real property, is placed in service during the last quarter, all of the property placed in service in the second quarter will be allowed 7.5 months of cost recovery.

a. True

b. False

11.Under MACRS, if the mid-quarter convention is applicable, all property sold is treated as being sold at the mid-point of the quarter in which it is placed in service.

a. True

b. False

12.The factor for determining the cost recovery for eligible real estate under MACRS, in the year of disposition, is taken from the month of the disposition.

a. True

b. False

13.Residential rental real estate includes property where 80% or more of the net rental revenues are from nontransient dwelling units.

a. True

b. False

.

14.Motel buildings have a cost recovery period of 27.5 years.

a. True

b. False

15.Taxpayers may elect to use the straight-line method under MACRS for personalty.

a. True

b. False

16.Under the MACRS straight-line election for personalty, only the half-year convention is applicable.

a. True

b. False

.

17.The cost recovery method for new farm equipment placed in service during 2014 is 200% declining balance.

a. True

b. False

.

18.In a farming business, MACRS straight-line cost recovery is required for all fruit bearing trees.

a. True

b. False

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