Question

**PLEASE TAKE YOUR TIME IN ANSWERING THESE QUESTIONS** Be sure to use the most current Tax information (2018)  

1,. What is the maximum depreciation in 2018 for an automobile driven 100% for business that was acquired on July 2, 2018, for $28,000? Assume the taxpayer elects Section 179 on the automobile but elects out of bonus depreciation. This is the only property placed in service during 2018. The vehicle has a gross vehicle weight rating under 6,000 pounds.

		$25,000
		$3,160
		$10,000
		$18,000
		$28,000

2. On July 1, 2017, a taxpayer enters into a 36-month lease. The terms of the lease require the taxpayer to pay $1,000 a month. Based on the value of the automobile, the inclusion amounts for years 1 through 3 are $314, $590, and $602, respectively. If the taxpayer uses the car 70% for business, what net amount can be deducted for lease expense in 2018?

		$7,987
		$5,705
		$11,587
		$12,000
		$4,920

3. For purposes of computing depreciation on the taxpayer's home for the home office deduction, the depreciable basis of the home is:

		the taxpayer's adjusted basis in the home at the time it is converted to a home office.
		the fair market value of the home at the beginning of the tax year.
		the fair market value of the home at the time it is converted to a home office.
		the lesser of a. or c.
		the lesser of a. or b.

4. In December 2018, a taxpayer leased out property for three years, receiving $600 for the December rent and $600 for January's rent. A refundable security deposit of $500 was also received. How much rental income should be reported in 2018?

		$600
		$1,100
		$1,200
		$1,700
		None of the above.

Answer 1

1) $ 28,000

2) $ 7,987

3) Lessor of

a. the taxpayer's adjusted basis in the home at the time it is converted to a home office. (or)

c. the fair market value of the home at the time it is converted to a home office.

4) $ 600