Question

On June 6, 2017, Abbas bought a computer for $50,000 for business use. This was the only purchase for that year. Abbas used the most accelerated depreciation method available but did not elect Sec. 179. Bonus depreciation was not available. Abbas sells the machine in 2018. The depreciation on the computer for 2018 is

A) $2,400.

B) $6,600.

C) $8,000.

D) $16,000.

29. Juan acquires an oil and gas property interest for $500,000. Juan expects to recover 100,000 barrels of oil. Intangible drilling and development costs are $125,000 and are charged to expense. Other expenses are $50,000. During the year, 20,000 barrels of oil are sold for $650,000. Juan's depletion deduction is

A) $100,000.

B) $112,500.

C) $160,000.

D) $600,000.

30) Daniel recognizes $35,000 of Sec. 1231 gains and $25,000 of Sec. 1231 losses during the current year. The only other Sec. 1231 item was a $4,000 loss three years ago. This year, Daniel must report

A)

NLTCG	Ordinary Income
$10,000	$0

B)

NLTCG	Ordinary Income
$6,000	$4,000

C)

NLTCG	Ordinary Income
$4,000	$6,000

D)

NLTCG	Ordinary Income
$4,000	$10,000

Answer 1

ans 1
Computer
Depreciation rate (5 year property ) for second year is 32% using half year convention
50000*32%	16000
Option D $16000
ans 2
Depletion rate per barrel=500000/10000		$5
Depletion deduction on 20000 barrel
20000*5	$100,000
Option A $100000
ans 3
Total capital gain under section 1231
$35000-$25000=$10000
Now $4000 was loss three years ago so out of $10000
$4000 will be treated as ordinary income and (10000-4000)
$6000 will be treated as net long term capital gain
Option B
B)
NLTCG	Ordinary Income
$6,000	$4,000
If any doubt plese comment