income tax test bank. download for A grade

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. Property which is classified as personalty may be depreciated. a. True b. False ANSWER: True 2. The basis of cost recovery property must be reduced by at least the cost recovery allowable. a. T... rue b. False ANSWER: True RATIONALE: The basis of cost recovery property must be reduced by the cost recovery allowed but not less than the cost recovery allowable. 3. Antiques may be eligible for cost recovery if they are used in a trade or business. a. True b. False ANSWER: False 4. The key date for calculating cost recovery is the date the asset is placed in service. a. True b. False ANSWER: True RATIONALE: The key date for calculating cost recovery is the date the asset is placed in service, not the purchase date. 5. Land improvements are generally not eligible for cost recovery. a. True b. False ANSWER: False RATIONALE: Land improvements are 15-year class property. 6. The cost recovery basis for property converted from personal use to business use may be the fair market value of the property at the time of the conversion. a. True b. False ANSWER: True RATIONALE: This would occur for the loss basis if the fair market value is less than the adjusted basis of the property. 7. The maximum cost recovery method for all personal property under MACRS is 150% declining balance. a. True b. False ANSWER: False RATIONALE: MACRS uses both 200% and 150% declining balance depending on the class of the property. 8. The cost recovery period for 3-year class property is 4 years. a. True b. False ANSWER: True 9. All personal property placed in service in 2013 and used in a trade or business qualifies for additional first-year depreciation. a. True b. False ANSWER: False RATIONALE: Only new property placed in service in 2013 qualifies for additional first-year depreciation. 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 placed in service in the second quarter will be allowed 7.5 months of cost recovery. a. True b. False ANSWER: True [Show More]

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