Income Tax Fundamentals 2020
38th Edition
ISBN: 9780357391129
Author: WHITTENBURG
Publisher: Cengage
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Textbook Question
Chapter 8, Problem 5MCQ
Which of the following statements with respect to the depreciation of property under MACRS is incorrect?
- Under the half-year convention, one-half year of depreciation is allowed in the year the property is placed in service.
- If a taxpayer elects to use the straight-line method of depreciation for property in the 5 -year class, all other 5 -year class property acquired during the year must also be
depreciated using the straight-line method. - In some cases, when a taxpayer places a significant amount of property in service during the last quarter of the year, real property must be depreciated using a mid-quarter convention.
- Real property acquired after 1986 must be depreciated using the straight-line method.
- The cost of property to which the MACRS rate is applied is not reduced for estimated salvage value.
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Students have asked these similar questions
On July 1 of year 1, Riverside Corporation (RC), a calendar-year taxpayer, acquired the assets of another
business in a taxable acquisition. When the purchase price was allocated to the assets purchased, RC
determined it had purchased $2,106,000 of goodwill for both book and tax purposes. At the end of year 1,
RC determined that the goodwill had not been impaired during the year. In year 2, however, RC concluded
that $460,000 of the goodwill had been impaired and wrote down the goodwill by $460,000 for book
purposes.
Required:
a. What book-tax difference associated with its goodwill should RC report in year 1? Is it favorable or
unfavorable? Is it permanent or temporary?
b. What book-tax difference associated with its goodwill should RC report in year 2? Is it favorable or
unfavorable? Is it permanent or temporary?
Complete this question by entering your answers in the tabs below.
Req A
Req B
On July 1 of year 1, Riverside Corporation (RC), a calendar-year taxpayer, acquired the assets of another business in a taxable acquisition. When the purchase price was allocated to the assets purchased, RC determined it had purchased $1,710,000 of goodwill for both book and tax purposes. At the end of year 1, RC determined that the goodwill had not been impaired during the year. In year 2, however, RC concluded that $670,000 of the goodwill had been impaired and wrote down the goodwill by $670,000 for book purposes.
Required:
What book–tax difference associated with its goodwill should RC report in year 1? Is it favorable or unfavorable? Is it permanent or temporary?
What book–tax difference associated with its goodwill should RC report in year 2? Is it favorable or unfavorable? Is it permanent or temporary?
Is a deduction allowed under the MACRS rules for depreciable real estate (used in a business or held for investment) in the year the property is sold? If so, explain how it is calculated.
O A. Yes, a deduction is allowed under the MACRS rules for depreciable real estate in the year the property is sold. It is assumed that the asset is held for the entire year. The amount of depreciation is computed by taking 100% of the annual depreciation.
O B. No, there is no deduction allowed under the MACRS rules for depreciable real estate in the year the property is sold.
O C.
O D.
Yes, a is deduction allowed under the MACRS rules for depreciable real estate in the year the property is sold. It is assumed that the asset is held for half the year. The amount of depreciation is computed by taking 6/12's of the annual depreciation.
Yes, depreciation for real estate is computed using tables that follow the mid-month convention, so depreciation is allowed in the year of sale. The amount of…
Chapter 8 Solutions
Income Tax Fundamentals 2020
Ch. 8 - Alice purchases a rental house on August 22,2019,...Ch. 8 - An asset (not an automobile) put in service in...Ch. 8 - An asset (not an automobile) put in service in...Ch. 8 - James purchased office equipment for his business....Ch. 8 - Which of the following statements with respect to...Ch. 8 - Which of the following is not true about the MACRS...Ch. 8 - On July 20,2019, Kelli purchases office equipment...Ch. 8 - Which of the following is not considered a limit...Ch. 8 - In 2019, Ben purchases and places in service a new...Ch. 8 - In 2019, Ben purchases and places in service a new...
Ch. 8 - Prob. 11MCQCh. 8 - Prob. 12MCQCh. 8 - Prob. 13MCQCh. 8 - In 2019, Mary sells for $24,000 a machine used in...Ch. 8 - Prob. 15MCQCh. 8 - Prob. 16MCQCh. 8 - Virginia has business property that is stolen and...Ch. 8 - Pat sells land for $25,000 cash and a $75,000...Ch. 8 - Prob. 19MCQCh. 8 - Prob. 20MCQCh. 8 - Oscar owns a building that is destroyed in a...Ch. 8 - Prob. 22MCQCh. 8 - Prob. 1PCh. 8 - Prob. 2PCh. 8 - 3. Mike purchases a new heavy-duty truck (5-year...Ch. 8 - On March 8,2019, Holly purchased a residential...Ch. 8 - Prob. 5PCh. 8 - Prob. 6PCh. 8 - Calculate the following: The first year of...Ch. 8 - During 2019, William purchases the following...Ch. 8 - On February 2,2019, Alexandra purchases a personal...Ch. 8 - On September 14,2019, Jay purchased a passenger...Ch. 8 - Tom has a successful business with $100,000 of...Ch. 8 - Prob. 14PCh. 8 - Annie develops a successful tax practice. She...Ch. 8 - Prob. 18PCh. 8 - Prob. 19PCh. 8 - Prob. 20PCh. 8 - Prob. 21P
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- On July 1 of year 1, Riverside Corporation (RC), a calendar-year taxpayer, acquired the assets of another business in a taxable acquisition. When the purchase price was allocated to the assets purchased, RC determined it had purchased $2.115.000 of goodwill for both book and tax purposes. At the end of year 1, RC determined that the goodwill had not been impaired during the year. In year 2. however, RC concluded that $350,000 of the goodwill had been impaired and wrote down the goodwill by $350,000 for book purposes. Required: a. What book-tax difference associated with its goodwill should RC report in year 1? Is it favorable or unfavorable? Is it permanent or temporary? b. What book-tax difference associated with its goodwill should RC report in year 2? Is it favorable or unfavorable? Is it permanent or temporary? Complete this question by entering your answers in the tabs below.arrow_forwardOn July 1 of year 1, Riverside Corporation (RC), a calendar-year taxpayer, acquired the assets of another business in a taxable acquisition. When the purchase price was allocated to the assets purchased, RC determined it had purchased $1,620,000 of goodwill for both book and tax purposes. At the end of year 1, RC determined that the goodwill had not been impaired during the year. In year 2, however, RC concluded that $635,000 of the goodwill had been impaired and wrote down the goodwill by $635,000 for book purposes. Required: a. What book-tax difference associated with its goodwill should RC report in year 1? Is it favorable or unfavorable? Is it permanent or temporary? b. What book-tax difference associated with its goodwill should RC report in year 2? Is it favorable or unfavorable? Is it permanent or temporary? Complete this question by entering your answers in the tabs below. Required A Required B What book-tax difference associated with its goodwill should RC report in year 1? Is…arrow_forwardOn July 1 of year 1, Riverside Corporation (RC), a calendar-year taxpayer, acquired the assets of another business in a taxable acquisition. When the purchase price was allocated to the assets purchased, RC determined it had purchased $1,800,000 of goodwill for both book and tax purposes. At the end of year 1, RC determined that the goodwill had not been impaired during the year. In year 2, however, RC concluded that $390,000 of the goodwill had been impaired and wrote down the goodwill by $390,000 for book purposes. Required 1. What book-tax difference associated with its goodwill should RC report in year 1? Is it favorable or unfavorable? Is it permanent or temporary? Book-tax difference Is it favorable or unfavorable? Is it permanent or temporary? Show Transcribed Text 2. What book-tax difference associated with its goodwill should RC report in year 2? Is it favorable or unfavorable? Is it permanent or temporary? Book-tax difference Is it favorable or unfavorable? Is it permanent or…arrow_forward
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