Question

4. Daschle LLC completed some research and development during June of the current year. The related costs were $73,800. If Daschle wants to capitalize and amortize the costs as quickly as possible, what is the total amortization expense Daschle may deduct during the current year?

MULTIPLE CHOICE

$0

$7,995

$8,610

$14,760

None of the choices are correct

5. Jorge purchased a copyright for use in his business in the current year. The purchase occurred on July 15^th and the purchase price was $82,500. If the patent has a remaining life of 75 months, what is the total amortization expense Jorge may deduct during the current year?

MULTIPLE CHOICE

$0

$6,050

$6,600

$13,200

none of the choices are correct

6. Butte sold a machine to a machine dealer for $50,600. Butte bought the machine for $54,400 several years ago and has claimed $12,200 of depreciation expense on the machine. What is the amount and character of Butte's gain or loss?

MULTIPLE CHOICE

$8,400 1231 loss

$3,800 1231 loss

$8,400 ordinary gain

$8,400 capital gain

None of the choices are correct

Answer 1

Ans.(4) $8,610

The amortization when capitalization is elected is $8,610 ($73,800/60)x 7month) The amortization period on capitalized research and development is not less than 60 months-and 60 months is the most often elected

Ans.(5) $6,600

The amortization is $6,600 ($82,500/75) x 6). The amortization period on a purchased patent is the asset's remaining useful life.

Ans.(6) $8,400 ordinary gain

section 1245 recaptures the lesser of deprication taken ($12,200) or gain $8,400($54,400-$50,600+$12,200)

as ordinary income any remaining gain would be section 1231 gain