TAX Depreciation AIPB Questions with Complete Correct Answers | Grade A+

what is the life of buildings according to IRC rules? Ans: Commercial buildings: over 39 years Residential buildings: over 27½ years When does depreciation of Real Property (real estate) begin? Ans: in the middle of the month it is placed in service. This is known as the Half-Month Convention what is the Mid Quarter Convention? Ans: Under the mid-quarter convention, when more than 40% of the plant's and equipment's cost (acquisition cost - §179 deduction) is placed in service in the last quarter of the year, depreciation begins in the middle of the quarter it is placed in service. IRS tables for property other than buildings—i.e., plant and equipment generally follow what guidelines put forth by the IRS Ans: *specify a 5-year or 7-year recovery period *use the DDB or SL method *assume the asset was placed in service in the middle of the year regardless of purchase date (half-year convention) What is Bonus Depreciation? Ans: a deduction of 50% of the asset's original cost in the first year if placed in service Bonus depreciation applies to new depreciable property with a life of 20 years or less but does not apply to what? Ans: Building