Reference no: EM133152147

Questions -

Q1 - On January 15, 2020, Dillon purchased the rights to a mineral interest for $3,600,000. At that time, it was estimated that the recoverable units would be 500,000. During the year, 40,000 units were mined and 25,000 units were sold for $800,000. Dillon included expenses during 2020 of $500,000. The percentage depletion rate is 22%. Determine Dillon's depletion deduction for 2020. Particulars

Q2 - In 2018, Gail had a § 179 deduction carryover of $30,000. In 201 9, she elected § 179 for an asset acquired at a cost of$115,000. Gail's§ 179 business income limitation for 2019 is $140,000. Determine Gail's§ 179 deduction for 2019.

Q3 - On May 5 of the current tax year, Byrne purchased a patent that qualifies as a § 197 intangible. The cost of the patent was $260,000 and Byrne is a calendar year taxpayer. In the current tax year, how much of the patent's cost may Byrne amortize?

Q4 - On January 1, 2020, Symbol Company completed its acquisition of Jimmy Corp. As part of the acquisition, $2,400,000 million was allocated to goodwill. What is Symbol Net's amortization deduction related to the goodwill for 2020?

Q5 - Maple-Company purchases new equipment (7-year MACRS property) on January 10, 2019, at a cost of $438,000. Maple also purchases new machines (5-year MACRS property) on July 19, 2019 at a cost of $290,000. Maple wants to maximize its MACRS deductions; assume no taxable income limitations apply. What is Maple's total MACRS deduction for 2019?

Q6 - The Big Tex Oil Company purchases an oil lease for $1,000,000. After exploration, oil is discovered and it is estimated that 100,000 barrels of oil will be recovered from the lease. If during the current year Big Tex produces 15,000 barrels of oil from the lease and sells 10,000 barrels, what is the amount of cost depletion allowed to Big Tex?

Q8 - Robert purchased and placed in service $100,000 of 7-year class assets on August 10 of the current year. He also purchased and placed in service $500,000 of 5-year class assets on November 15 of the current year. He does not claim any available additional first-year depreciation. If Robert elects to use the MACRS straight-line method of cost recovery on the 7-year class assets, discuss the calculation of cost recovery for the 5-year class assets.

Q9 - Lopez acquired a building on June 1, 2016, for $1,000,000. Calculate Lopez's cost recovery deduction for 2021 if the building is:

a. Classified as residential rental real estate.

b. Classified as non-residential real estate.

Q10 - Diana acquired, for $65,000, and places in service a 5-year class asset on December 19, 2021. It is the only asset that Diana acquires during 2021.

Diana does not elect immediate expensing under § 179. She elects additional first-year depreciation. Calculate Diana's total cost recovery deduction for 2021.

Q11 - On March 25, Parscale Company purchases the rights to a mineral interest for $8,000,000. At that time, the remaining recoverable units in the mineral interest are estimated to be 500,000 tons. If 80,000 tons are mined and 75,000 tons are sold this year, calculate Parscale's cost depletion for the year.

Q12 - On March 15, 2021, Helen purchased and placed in service a new Escalade. The purchase price was $62,000, and the vehicle had a rating of 6,500 GVW. The vehicle was used 100% for business.

a. Assuming that Helen does not use additional first-year depreciation, calculate the total depreciation deduction that she can take on the vehicle for 2021.

b. What would your answer be if Helen decided to take additional first-year depreciation?