25 May Question 1. On March 1, 2014, Lana leases and places in service a pa
Question
1. On March 1, 2014, Lana leases and places in service a passenger automobile. The lease will run for five years and the payments are $500 per month. During 2014, she uses her car 60% for business and 40% for personal activities. Assuming the dollar amount from the IRS table is $20, determine Lana’s inclusion as a result of the lease.
a. $0.
b. $10.
c. $17.
d. $20.
e. None of the above.
2. On June 1, 2014, Norm leases a taxi and places it in service. The lease payments are $1,000 per month. Assuming the dollar amount from the IRS table is $241, determine Norm’s inclusion amount.
a. $0.
b. $241.
c. $907.
d. $1,687.
e. None of the above.
3. Bhaskar purchased a new factory building on September 10, 2014, for $3,700,000. Five hundred thousand of the purchase price was allocated to the land. He elected the alternative depreciation system (ADS). Determine the cost recovery deduction for 2015.
a. $23,328.
b. $80,000.
c. $82,048.
d. $92,500.
e. None of the above.
.
4. Pat purchased a used five-year class asset on March 15, 2014, for $60,000. He did not elect § 179 expensing. Determine the cost recovery deduction for 2014 for earnings and profits purposes.
a. $2,000.
b. $3,000.
c. $6,000.
d. $12,000.
e. None of the above.
5. George purchases used seven-year class property at a cost of $200,000 on April 20, 2014. Determine George’s cost recovery deduction for 2014 for alternative minimum tax purposes, assuming George does not elect § 179.
a. $2,500.
b. $10,000.
c. $14,280.
d. $28,580.
e. None of the above.
6. During the past two years, through extensive advertising and improved customer relations, Orange Corporation estimated that it had developed customer goodwill worth $500,000. For the current year, determine the amount of goodwill Orange Corporation may amortize.
a. $16,667.
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