Flashcards in Individual Taxation - Depreciation Deck (17):
Under Sec. 179, A taxpayer may elect to expense up to _____ of the cost of new or used tangible depreciable personal property placed in service during the taxable year
For a taxpayer to be eligible to elect to expense up to $500,000 of the cost of new or used tangible depreciable personal property placed in service during the taxable year they must fulfill what two requirements?
1) The property must be acquired by purchase from an unrelated party
2) The property must be purchased for use in the taxpayer's active trade or business
Although a taxpayer may expense up to $500,000 of the cost of new or used tangible depreciable personal property place in service during the taxable year, they are limited by what two situations?
1) The maximum cost that can be expensed of $500,000 is reduced dollar-for-dollar by the cost of qualifying property that is placed in service during the year that exceeds $2M
2) The amount that can be expensed is further limited to the aggregate taxable income derived from the active conduct of any trade or business of the taxpayer
Computers & Peripheral Equipment, Office Machinery, Autos, & Light trucks are in what category of MACRS
5-year, 200% Class
Office furniture & fixtures are in what category of MACRS
7-year, 200% Class
Residential Rental Property is in what category of MACRS
27 1/2-year, Straight-Line Class
Property that is neither residential real property nor property with a class life of less than 27.5 years is in what category of MACRS?
39-year, Straight-Line Class
Personal property is treated as placed in service or disposed of at what point in the year?
At the midpoint of the taxable year, resulting in a half-year of depreciation
Personal Property recognizes no depreciation in the year the property is placed into service
Personal Property recognizes a half-year in the year in which the property is placed into service or disposed of
If personal property is disposed of in the same taxable year in which it was placed in service no depreciation is allowed
Under this convention, property is treated as placed in service (or disposed of) in the middle of the quarter in which placed in service (or disposed of)
When is the midquarter convention used?
If more than 40% of all personal property is placed in service during the last quarter of the taxpayer's taxable year
Real property is treated as placed in service (or disposed of) when?
In the middle of a month, resulting in a half-month/mid-month depreciation convention
Under MACRS, used tangible depreciable property is excluded from the computation
Under MACRS, salvage value is ignored for purposes of computing the MACRS deduction
Under MACRS, no type of straight-line depreciation is allowable