Research Problems
Module 10
Neon Corporation, a calendar-year, accrual-basis taxpayer, signed a contract in December, 2001 to purchase a central air conditioning unit, to be delivered in May, 2002. Due to numerous construction delays, installation of the unit was not completed until October, 2002. However, the unit was not actually turned on and used until May, 2003. Neon asks if they can depreciate the unit on its 2001 tax return, even though the unit was not actually used in service during that year. For federal tax purposes, when was the central air conditioning unit "placed in service"?
Open the OnPoint CD. From the Federal Tax Coordinator data base form a query using the following three words: air conditioner depreciation. Then return to Tax Point and choose the correct answer.
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WXYZ, a local television station, recently purchased a helicopter for use by its news division. For tax purposes, what MACRS recovery period will be assigned to the helicopter?
Open the OnPoint CD. From the Explanations data base research this question by refering to the full text of Rev. Proc. 87-56. Then return to Tax Point and choose the correct answer.
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Bremo Company, a calendar-year taxpayer, acquired $55,000 of 5-year recovery period personalty in July 2000 and $45,000 of 7-year recovery period personalty in December 2000. These were their only acquisitions of personalty during the year. If Bremo elects Sec. 179 expensing on the December acquisition, what is the percentage relationship between (1) personalty acquired during the last quarter of the year and (2) total personalty acquired during the tax year when testing to see if the mid-quarter convention applies?
Open the OnPoint CD. From the Federal Tax Coordinator data base, refer to paragraph L-8708. Then return to Tax Point and choose the correct answer.
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Hank Mays placed in service an automobile costing $30,000 in 1999. He uses the automobile 70% of the time in business, 20% of the time in managing his rental property, and 10% of the time for personal reasons. Mays sold the automobile in 2000. What is his MACRS deduction for 2000, the year of sale?
Open the OnPoint CD. From the Federal Tax Coordinator data base, refer to paragraph L-10005. Then return to Tax Point and choose the correct answer.
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Bells Corporation, a calendar-year taxpayer, acquired the assets of Ringer Company in January of the current year. Included in the acquisition was $15,000 worth of "off the shelf" software normally available for sale to the public. This software had not been altered by Ringer Company. What is the appropriate amortization period for Bells to use for this software?
Open the OnPoint CD. Select the Internal Revenue Code data base, refer to Sec. 167 Then return to Tax Point and choose the correct answer.
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