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South Western Federal Taxation 2015 Comprehensive 38th Edition Hoffman Test Bank
South Western Federal Taxation 2015 Comprehensive 38th Edition Hoffman Test Bank
ANSWER: True
2. The basis of cost recovery property must be reduced by at least the cost recovery allowable.
a. True
b. False
ANSWER: True
RATIONALE: The basis of cost recovery property must be reduced by the cost recovery allowed but not
less than the cost recovery allowable.
3. Antiques may be eligible for cost recovery if they are used in a trade or business.
a. True
b. False
ANSWER: False
4. The key date for calculating cost recovery is the date the asset is placed in service.
a. True
b. False
ANSWER: True
RATIONALE: The key date for calculating cost recovery is the date the asset is placed in service, not the
purchase date.
ANSWER: False
RATIONALE: Land improvements are 15-year class property.
6. The cost recovery basis for property converted from personal use to business use may be the fair market
value of the property at the time of the conversion.
a. True
b. False
ANSWER: True
RATIONALE: This would occur for the loss basis if the fair market value is less than the adjusted basis of
the property.
7. The maximum cost recovery method for all personal property under MACRS is 150% declining balance.
a. True
b. False
ANSWER: False
RATIONALE: MACRS uses both 200% and 150% declining balance depending on the class of the
property.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 8 Depreciation, Cost Recovery, Amortization, and Depletion
ANSWER: True
9. All personal property placed in service in 2013 and used in a trade or business qualifies for additional first-
year depreciation.
a. True
b. False
ANSWER: False
RATIONALE: Only new property placed in service in 2013 qualifies for additional first-year depreciation.
10. If more than 40% of the value of property, other than real property, is placed in service during the last
quarter, all of the property placed in service in the second quarter will be allowed 7.5 months of cost
recovery.
a. True
b. False
ANSWER: True
11. Under MACRS, if the mid-quarter convention is applicable, all property sold is treated as being sold at the
mid-point of the quarter in which it is placed in service.
a. True
b. False
ANSWER: False
RATIONALE: All property sold is treated as being sold at the mid-point of the quarter in which it is sold.
12. The factor for determining the cost recovery for eligible real estate under MACRS, in the year of
disposition, is taken from the month of the disposition.
a. True
b. False
ANSWER: False
RATIONALE: The factor is taken from the month the real estate is placed in service.
13. Residential rental real estate includes property where 80% or more of the net rental revenues are from
nontransient dwelling units.
a. True
b. False
ANSWER: False
RATIONALE: The test is 80% or more of gross rental revenues.
ANSWER: False
RATIONALE: Motel buildings are classified as nonresidential real estate with a recovery period of 39
years.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 8 Depreciation, Cost Recovery, Amortization, and Depletion
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 8 Depreciation, Cost Recovery, Amortization, and Depletion
15. Taxpayers may elect to use the straight-line method under MACRS for personalty.
a. True
b. False
ANSWER: True
16. Under the MACRS straight-line election for personalty, only the half-year convention is applicable.
a. True
b. False
ANSWER: False
RATIONALE: The mid-quarter convention is applicable under the MACRS straight-line election for
personalty.
17. The cost recovery method for new farm equipment placed in service during 2014 is 200% declining
balance.
a. True
b. False
ANSWER: False
RATIONALE: The cost recovery method is 150% declining balance.
18. In a farming business, MACRS straight-line cost recovery is required for all fruit bearing trees.
a. True
b. False
ANSWER: True
19. In a farming business, if the uniform capitalization rules are not used, cost is recovered using the ADS
straight-line method.
a. True
b. False
ANSWER: True
20. When lessor owned leasehold improvements are abandoned because of the termination of the lease, a loss
can be taken for the unrecovered basis.
a. True
b. False
ANSWER: True
21. The costs of qualified leasehold improvements qualify for additional first-year depreciation.
a. True
b. False
ANSWER: True
22. For personal property placed in service in 2014, the § 179 maximum deduction is limited to $25,000.
a. True
b. False
ANSWER: True
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 8 Depreciation, Cost Recovery, Amortization, and Depletion
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 8 Depreciation, Cost Recovery, Amortization, and Depletion
23. The § 179 deduction can exceed $25,000 in 2014 if the taxpayer had a § 179 amount which exceeded the
taxable income limitation in the prior year.
a. True
b. False
ANSWER: False
RATIONALE: The § 179 amount eligible for expensing in a carryforward year is limited to the lesser of
(1) the statutory dollar amount ($25,000 in 2014) reduced by the cost of § 179 property
placed in service in excess of $100,000 in the carryforward year or (2) the business income
limitation in the carryforward year.
24. Any § 179 expense amount that is carried forward is subject to the business income limitation in the
carryforward year.
a. True
b. False
ANSWER: True
25. Taxable income for purposes of § 179 limited expensing is computed by including the MACRS deduction.
a. True
b. False
ANSWER: True
RATIONALE: MACRS depreciation is a deduction in computing taxable income for purposes of the § 179
limitations.
26. The basis of an asset on which $20,000 has been expensed under § 179 will be reduced by $20,000, even if
$20,000 cannot be expensed in the current year because of the taxable income limitation.
a. True
b. False
ANSWER: True
27. Property used for the production of income is not eligible for § 179 expensing.
a. True
b. False
ANSWER: True
28. The statutory dollar cost recovery limits under § 280F does apply to all automobiles.
a. True
b. False
ANSWER: False
RATIONALE: The statutory cost recovery limits under § 280F apply only to automobiles which meet the
definition of a passenger automobile (e.g., do not apply to a taxi).
29. The § 179 limit for a sports utility vehicle with a GVW of 7,000 pounds will not apply if the sports utility
vehicle is used as a taxi.
a. True
b. False
ANSWER: False
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Another random document with
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use of the monks in their devotions. This summary of the first
contents of the library is taken by Hardy from the Gesta Abbatum, a
chronicle of St. Albans.
The literary interests of Paul were, it appears, continued by a large
proportion at least of his successors, and many of these made
important contributions to the library. Geoffrey, the sixteenth abbot,
gave to the scriptorium a missal bound in gold, and another missal in
two volumes, both incomparably illuminated in gold and written in an
open and legible script. He also gave a precious illuminated psalter,
a book containing the benediction and sacraments, a book of
exorcism, and a collectory. (The description is taken from the Gesta.)
Ralph, the seventeenth abbot, was said to have become a lover of
books after having heard Wodo of Italy expound the Scriptures. He
collected with diligence a large number of valuable manuscripts.
Robert de Gorham, who was called the reformer of the liberty of the
Church of St. Albans, after becoming prior, gave many books to the
scriptorium, more than could be mentioned by the author of the
Gesta. Simon, who became abbot in 1166, caused to be created the
office of historiographer. Simon had been educated in the abbey, and
did not a little to add to its fame as a centre of literature. He repaired
and enlarged the scriptorium, and he kept two or three scribes
constantly employed in it. The previous literary abbots had for the
most part brought from without the books added to the collection, but
it was under Simon that the abbey became a place of literary
production as well as of literary reproduction. He had an ordinance
enacted to the effect that every abbot must support out of his
personal funds one adequate scribe. Simon presented to the abbey
a considerable group of books that he had himself been collecting
before his appointment as abbot, together with a very beautiful copy
of the Old and New Testaments.
The next literary abbot was John de Cell, who had been educated
in the schools of Paris, and who was profoundly learned in grammar,
poetry, and physics. On being elected abbot, he gave over the
management of the temporal affairs of the abbey to his prior,
Reymond, and devoted himself to religious duties and to study.
Reymond himself was a zealous collector, and it was through him
that was secured for the library, among many other books, a copy of
the Historica Scholastica cum Allegoriis, of Peter Comester. The
exertions of these scholarly abbots and priors won for St. Albans a
special distinction among the monasteries of Britain, and naturally
led to the compilation of the historic annals which gave to the abbey
a continued literary fame. Hardy is of opinion that these historic
annals date from the administration of Simon, between the years
1166 and 1183.
Richard of Wendover, who succeeded Walter as historiographer,
compiled, between the years 1230 and 1236, the Flores Historiarum,
one of the most important of the earlier chronicles of England. Hardy
points out that it could have been possible to complete so great a
work within the term of six years, only on the assumption that
Richard found available much material collected by Walter, and it is
also probable that other compilations were utilised by Richard for the
work bearing his name. It is to be borne in mind that the monastic
chronicles were but seldom the production of a single hand, as was
the case with the chronicles of Malmesbury and of Beda. The greater
number of such chronicles grew up from period to period, fresh
material being added in succeeding generations, while in every
monastic house in which there were transcribers, fresh local
information was interpolated until the tributary streams had grown
more important than the original current. In this manner, the
monastic annals were at one time a transcript, at another time an
abridgment, and at another an original work. “With the chronicler,
plagiarism was no crime and no degradation. He epitomised or
curtailed or adapted the words of his predecessors in the same path
with or without alteration (and usually without acknowledgment),
whichever best suited his purpose or that of his monastery. He did
not work for himself but at the command of others, and thus it was
that a monastery chronicle grew, like a monastery house, at different
times, and by the labour of different hands.”
Of the heads that planned such chronicles or of the hands that
executed them, or of the exact proportion contributed by the several
writers, no satisfactory record has been preserved. The individual is
lost in the community.
In the earlier divisions of Wendover’s chronicle, covering the
centuries from 231 down to about 1000, Wendover certainly relied,
says Hardy, upon some previous compilation. About the year 1014,
that narrative, down to the death of Stephen, showed a marked
change in style, giving evidence that after this period some other
authority had been adopted, while there was also a larger
introduction of legendary matter. From the accession of Henry II., in
1235, when the Flores Historiarum ends, Wendover may be said to
assume the character of an original author. On the death of Richard,
the work of historiographer was taken up by Matthew Paris. His
Lives of the Two Offas and his famous Chronicles were produced
between the years 1236 and 1259.
In certain of the more literary of the English monasteries, the
divine offices were moderated in order to allow time for study, and,
under the regulations of some foundations, “lettered” persons were
entitled to special exemption from the performance of certain daily
services, and from church duty.[145]
At a visitation of the treasury of St. Pauls, made in the year 1295,
by Ralph de Baudoke, the Dean (afterwards Bishop of London),
there were found twelve copies of the Gospels adorned, some with
silver, and others with pearls and gems, and a thirteenth, the case
(capsa) containing which was decorated not merely with gilding but
with relics.[146] The treasury also contained a number of other
divisions of the Scriptures, together with a Commentary of Thomas
Aquinas. Maitland says that the use of relics as a decoration was an
unusual feature. He goes on to point out that the practice of using for
manuscripts a decorated case, caused the case, not infrequently, to
be more valuable than the manuscript itself, so that it would be
mentioned among the treasures of the church, when the book
contained in it was not sufficiently important to be even specified.
The binding of the books which were in general use in the English
monasteries for reference was usually in parchment or in plain
leather. The use of jewels, gold, or silver for the covers, or for the
capsæ, was, with rare exceptions, limited to the special copies
retained in the church treasury. William of Malmesbury in the
account which he gives of the chapel made at Glastonbury by King
Ina, mentions that twenty pounds and sixty marks of gold were used
in the preparation of the Coöpertoria Librorum Evangelii.[147]
The Earlier Monastery Schools.—At the time when
neither local nor national governments had assumed any
responsibilities in connection with elementary education, and when
the municipalities were too ignorant, and in many cases too poor, to
make provision for the education of the children, the monks took up
the task as a part of the regular routine of their duty. The Rule of S.
Benedict had in fact made express provision for the education of
pupils.
An exception to the general statement concerning the neglect of
the rulers to make provision for education should, however, be made
in the case of Charlemagne, whose reign covered the period 790 to
830. It was the aim of Charlemagne to correct or at least to lessen
the provincial differences and local barbarities of style, expression,
pression, orthography, etc., in the rendering of Latin, and it was with
this end in view that he planned out his great scheme of an imperial
series of schools, through which should be established an imperial or
academic standard of style and expression. This appears to have
been the first attempt since the time of the Academy of Alexandria to
secure a scholarly uniformity of the standard throughout the civilised
world, and the school at Tours may be considered as a precursor of
the French Academy of modern times. For such a scheme the
Emperor was dependent upon the monks, as it was only in the
monasteries that could be found the scholarship that was required
for the work. He entrusted to Alcuin, a scholarly English Benedictine,
the task of organising the imperial schools. The first schools
instituted by Alcuin in Aachen and Tours, and later in Milan, were
placed in charge of Benedictine monks, and formed the models for a
long series of monastic schools during the succeeding centuries.
Alcuin had been trained in the cathedral schools founded in York by
Egbert, and Egbert had been brought up by Benedict Biscop in the
monastery of Yarrow, where he had for friend and fellow pupil the
chronicler Bede. The results of the toilsome journeys taken by
Biscop to collect books for his beloved monasteries of Wearmouth
and Yarrow[148] were far-reaching. The training secured by Alcuin as
a scribe and as a student of the Scriptures, the classics, and the
“seven liberal arts” was more immediately due to his master Ælbert,
who afterward succeeded Egbert as archbishop.
The script which was accepted as the standard for the imperial
schools, and which, transmitted through successive Benedictine
scriptoria, served seven centuries later as a model for the first type-
founders of Italy and France, can be traced directly to the school at
York.
Alcuin commemorated his school and its master in a descriptive
poem On the Saints of the Church at York, which is quoted in full by
West.[149] In 780, Alcuin succeeded Ælbert as master of the school,
and later, was placed in charge of the cathedral library, which was at
the time one of the most important collections in Christendom. In one
of his poems he gives a kind of metrical summary of the chief
contents of this library. The lines are worth quoting because of the
information presented as to the authors at that time to be looked for
in a really great monastic library. The list includes a distinctive
though very restricted group of Latin writers, but, as West points out,
the works “by glorious Greece transferred to Rome” form but a
meagre group. The catalogue omits Isidore, although previous
references make clear that the writings of the great Spanish bishop
were important works of reference in York as in all the British
schools. It is West’s opinion that the Aristotle and other Greek
authors referred to were probably present only in Latin versions.
These manuscripts in the York library were undoubtedly for the most
part transcripts of the parchments collected for Wearmouth and
Yarrow by Biscop.
The Library of York Cathedral.