Question

-In March 2018, Zenia acquired a new automobile for $76,000 and used the automobile 70% for business. In 2019 her business use of the auto was 80%. Zenia's depreciation deduction for 2019 will be

A) $11,200.

B) $17,442.

C) $12,800.

D) $6,168.

-On January l, Grace leases and places into service an automobile with a FMV of $61,000. The business use of the automobile is 60%. The "inclusion amount" for the initial year of the lease from the IRS tables is $30. The annual lease payments are $11,000. What are the tax consequences of this lease?

A) deduction for lease payments of $6,582

B) deduction for lease payments of $6,570

C) deduction for lease payments of $6,600

D) deduction for lease payment of $6,630

-On January 1, 2018, NEIU Corporation acquires all of the net assets of Green Corporation for $4,500,000. The following intangible assets are included in the purchase agreement:

Assets	Acquisition Cost
Goodwill and going concern value	$200,000
Licenses	$ 100,000
Patents	$ 150,000
Covenant not to compete for five years	$180,000

What is the total amount of amortization allowed in 2018?

A) $15,000

B) $22,000

C) $31,000

D) $42,000

Answer 1

1.

$76,000 × 21%(depreciation) = $16,000

$16,000 × 80% = $12,800.

Option C is correct

2.

Lease payments of $11,000 × 60% = $6600 are initially allowed. The inclusion amount is $20 × 60% = $12.

Therefore,

$6600 - $12 = $6582

Option A is correct

3.

Calculation of Total amount of amortization

All intangible assets qualify as Section 197 intangible assets are amortized for 15 years. So, the total amortization is:

Total amount amortization=[$200,000+$100,000+$150,000+$180,000/15]

=> [$330,000/15]

Total amount of amortization = $42,000

Option D is correct