【正文】 ot eligible for cost recovery. ANS: F Land improvements are 15year class property. PTS: 1 DIF: 1 REF: Exhibit OBJ: 1 NAT: AICPA FNReporting | AACSB Analytic MSC: 2 min 6. The cost recovery basis for property converted from personal use to business use is the adjusted basis of the property at the time of the conversion. ANS: F The cost recovery basis for property converted from personal use to business use is the lower of the fair market value or the adjusted basis at the time of the conversion. PTS: 1 DIF: 1 REF: p. 85 OBJ: 1 NAT: AICPA FNReporting | AACSB Analytic MSC: 2 min 86 2020 Comprehensive Volume/Test Bank cost recovery method for all personal property under MACRS is 200% declining balance. ANS: F MACRS uses both 200% and 150% declining balance depending on the class of the property. PTS: 1 DIF: 1 REF: p. 87 OBJ: 2 NAT: AICPA FNMeasurement | AACSB Analytic MSC: 2 min 8. If 150% decliningbalance is used, there is no straightline switchover. ANS: F The straightline switchover takes place whether 200% or 150% decliningbalance is used. PTS: 1 DIF: 1 REF: p. 87 OBJ: 2 NAT: AICPA FNMeasurement | AACSB Analytic MSC: 2 min 9. Under the MACRS halfyear convention, an asset sold on December 10 will be treated as though it were sold on July 1 for a calendar year taxpayer. ANS: T PTS: 1 DIF: 1 REF: p. 88 OBJ: 2 NAT: AICPA FNMeasurement | AACSB Analytic MSC: 2 min 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 will be allowed months of cost recovery. ANS: F Only the property placed in service during the last quarter will be allowed months of cost recovery. PTS: 1 DIF: 1 REF: p. 89 OBJ: 2 NAT: AICPA FNMeasurement | AACSB Analytic MSC: 2 min 11. Under MACRS, if the midquarter convention is applicable, all property sold is treated as being sold at the midpoint of the quarter in which it is sold. ANS: T PTS: 1 DIF: 1 REF: p. 89 OBJ: 2 NAT: AICPA FNMeasurement | AACSB Analytic MSC: 2 min 12. All eligible real estate under MACRS is permitted a full month of cost recovery in the month of disposition. ANS: F Onehalf month of cost recovery is permitted in the month of disposition for realty under MACRS. PTS: 1 DIF: 1 REF: p. 811 | Concept Summary OBJ: 2 NAT: AICPA FNMeasurement | AACSB Analytic MSC: 2 min Depreciation, Cost Recovery, Amortization, and Depletion 87 placed in service after May 12, 1993 have a cost recovery period of 39 years. ANS: T PTS: 1 DIF: 1 REF: p. 810 OBJ: 2 NAT: AICPA FNMeasurement | AACSB Analytic MSC: 2 min 14. Apartment buildings are classified as residential rental real estate. ANS: T PTS: 1 DIF: 1 REF: p. 810 OBJ: 2 NAT: AICPA FNMeasurement | AACSB Analytic MSC: 2 min 15. Taxpayers may elect to use the straightline method under MACRS for personalty. ANS: T PTS: 1 DIF: 1 REF: p. 811 OBJ: 2 NAT: AICPA FNMeasurement | AACSB Analytic MSC: 2 min 16. Under the MACRS straightline election for personalty, the midquarter convention is not applicable. ANS: F The midquarter convention is applicable under the MACRS straightline election for personalty. PTS: 1 DIF: 1 REF: p. 811 OBJ: 2 NAT: AICPA FNMeasurement | AACSB Analytic MSC: 2 min 17. The cost recovery period for new farm equipment placed in service during 2020 is seven years. ANS: F The cost recovery period for such farm equipment is five years. PTS: 1 DIF: 1 REF: p. 812 OBJ: 2 NAT: AICPA FNMeasurement | AACSB Analytic MSC: 2 min 18. In a farming business, MACRS straightline cost recovery is required for all fruit bearing trees. ANS: T PTS: 1 DIF: 1 REF: p. 811 | p. 812 OBJ: 2 NAT: AICPA FNMeasurement | AACSB Analytic MSC: 2 min 19. In a farming business, if an election is made to not have the uniform capitalization rules apply, cost is recovered using the ADS straightline method. ANS: T PTS: 1 DIF: 1 REF: p. 812 OBJ: 2 NAT: AICPA FNMeasurement | AACSB Analytic MSC: 2 min 20. When lessor owned leasehold improvements are abandoned because of the termination of the lease, a loss can be taken for the unrecovered basis. ANS: T PTS: 1 DIF: 1 REF: p. 813 OBJ: 2 NAT: AICPA FNMeasurement | AACSB Analytic MSC: 2 min 88 2020 Comprehensive Volume/Test Bank 21. The costs of qualified leasehold improvements owned by the lessee are recovered over a 15year MACRS recovery period. ANS: T PTS: 1 DIF: 1 REF: p. 812 OBJ: 2 NAT: AICPA FNMeasurement | AACSB Analytic MSC: 2 min 22. For all property placed in service in 2020, the 167。 197 intangible Unchanged 38 39 Startup expenditures Unchanged 39 40 Depletion: cost versus percentage Unchanged 40 PROBLEMS 1 Cost recovery: MACRS personal property Unchanged 1 2 Cost recovery: MACRS real property Unchanged 2 3 Cost recovery: MACRS personal property and Modified 3 167。 179 amount before the business ine ceiling is applied. PTS: 1 DIF: 1 REF: p. 815 OBJ: 3 NAT: AICPA FNMeasurement | AACSB Analytic MSC: 2 min Depreciation, Cost Recovery, Amortization, and Depletion 89 used for the production of ine is not eligible for 167。 179 election. Tan did elect not to take additional firstyear depreciation. Determine the total deductions in calculating taxable ine related to the machines for 2020. a. $24,000. b. $25,716. c. $102,000. d. $132,858. e. None of the above. ANS: B The regular MACRS is calculated as follows: 10year property ($200,000 ? .10) $20,000 7year property ($40,000 ? .1429) 5,716 Total regular MACRS $25,716 PTS: 1 DIF: 1 REF: p. 85 to 88 | Table OBJ: 2 NAT: AICPA FNMeasurement | AACSB Analytic MSC: 5 min 7. James