Question

1. Jose purchased a delivery van for his business through an online auction. His winning bid for the van was $25,250. In addition, Jose incurred the following expenses before using the van: shipping costs of $1,270; paint to match the other fleet vehicles at a cost of $1,440; registration costs of $2,970, which included $2,750 of sales tax and a registration fee of $220; wash and detailing for $121; and an engine tune-up for $327.

What is Jose’s cost basis for the delivery van?

Cost basis

?

2. AMP Corporation (calendar-year-end) has 2017 taxable income of $900,000 for purposes of computing the §179 expense. During 2017, AMP acquired the following assets: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.)

	Placed in
Asset	Service		Basis
Machinery	September 12	$	1,340,000
Computer equipment	February 10		390,000
Office building	April 2		505,000
Total		$	2,235,000

a. What is the maximum amount of §179 expense AMP may deduct for 2017?

Maximum 179 expense deductible

?

3. Lax, LLC purchased only one asset during the current year (a full 12-month tax year). Lax placed in service computer equipment (5-year property) on August 26 with a basis of $32,000. Calculate the maximum depreciation expense for the current year (ignoring §179 and bonus depreciation). (Use MACRS Table 1)

MULTIPLE CHOICE

a. $4,400

b. $5,258

c. $ 5,400

d. $6,400

e. none of the choices are correct

4. Arlington LLC purchased an automobile for $43,000 on July 5, 2017. What is Arlington's depreciation expense for 2017 if its business use percentage is 57 percent (ignore any possible bonus depreciation)?Exhibit 10-8

MULTIPLE CHOICE

a. $1,801

b. $3,160

c. $4,902

d. $8,600

e. none of the choices are correct

5. Roth, LLC purchased only one asset during the current year. Roth placed in service computer equipment (5-year property) on November 1^st with a basis of $53,500. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation). (Use MACRS Table 2)

6. Alexandra purchased a $37,000 automobile during 2017. The business use was 70 percent. What is the allowable depreciation for the current year (ignore any possible bonus depreciation)?Exhibit 10-8

7. Oksana started an LLC on November 2 of the current year. She incurred $33,000 of start-up costs. How much of the start-up costs can be immediately expensed for the year? How much amortization may Oksana deduct in the first year?

8. Wheeler LLC purchased two assets during the current year (a full 12-month tax year). Wheeler placed in service computer equipment (5-year property) on November 16 with a basis of $21,500 and furniture (7-year property) on April 20 with a basis of $14,900. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation). (Use MACRS Table 2) (Round final answer to the nearest whole number.)

MULTIPLE CHOICE

a. $2,306

b. $3,735

c. $5,593

d. $6,221

e. none of the choices are correct

Answer 1