Question

QUESTION 11 On July 17, 2020, Kevin places in service a used automobile that cost $25,000. The car is used 80% for business and 20% for personal use. In 2021, he used the automobile 40% for business and 60% for personal use. Determine the cost recovery recapture for 2021. O a. 50 O b.$528 o $2,000 O d. $2,500 O'e. None of the above QUESTION 12 On June 1 of the current year, Tab converted a machine from personal use to rental property. At the time of the conversion, the machine was worth $90,000. Five years ago Tab purchased the machine for $120,000. The machine is still encumbered by a $50,000 mortgage. What is the basis of the machine for cost recovery? O a. $70,000 b. $90,000 O c. $120,000 O d. $140,000 e. None of the above QUESTION 13 White Company acquires a new machine (seven-year property) on January 10, 2020, at a cost of $620,000. White makes the election to expense the maximum amount under $ 179, and wants to take any additional first-year depreciation allowed. No election is made to use the straight-line method. Determine the total deductions in calculating taxable income related to the machine for 2020 assuming White has taxable income of $800,000 O a. $88,598 b.$301,159 OC $568,574 d. $620,000 o e. None of the above

Answer 1

As pet the HOMEWORKLIB POLICY, I am answering the first two questions:

11. macrs
(25000* .20)=5000
5000*.80=4000
because the second year usage of the car was less than 50% straight line dep. must be used
25000*.10=2500
2500*.80=2000

cost recovery recapture = 4000-2000=2000

Answer is c. $2,000

12. If personal use assets are converted to business, the basis of the assets for depreciation would be -

Lower of -

• The Adjusted basis of assets, or
• The fair market value of assets at the time of conversion.

In the given question, The Adjusted basis of assets is $120000 ( that is the purchased price ) and The fair market value of assets at the time of conversion is $90,000.

Option - (b) - $90,000, is Correct because the basis of the assets for depreciation would be lower of - The Adjusted basis of assets = $120000 ( that is the purchased price ), or The fair market value of assets at the time of conversion = $90,000.​​​​​​​

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