Question

Lance, the rental property owner, made several repairs/replacements this year and must decide whether they should be depreciated. Which of the following conditions is not a determining factor in deciding when repairs and replacements should be depreciated?

a) Increase the value of a property

b) Make the property more useful

c) Lengthen the life of the property

d) Cost of the repair/replacement exceeds $2,500

Tom is a salesman who started using a home office on 01/01/2004. He claims depreciation expense on his tax return. What is the class life for Tom’s home office?

a) 39 years

b) 31.5 years

c) 27.5 years

d) 20 years

What convention would Tom use in his calculation of depreciation?

a) Half-year
b) Mid-month c) Mid-quarter d) Semi-quarter

Answer 1

The following conditions are the determining factors in deciding whether repairs and replacements should be depreciated?

a) Increase the value of a property

b) Make the property more useful

c) Lengthen the life of the property

The following conditions is not a determining factor in deciding when repairs and replacements should be depreciated?

d) Cost of the repair/replacement exceeds $2,500

The class life for Tom’s home office is

a) 39 years

Tom would use the following convention in his calculation of depreciation:

b) Mid-month

The above answers are made as per IRS provisions.