HRB-16 Depreciation Exam Questions &
Answers 100% Correct!!
Accelerated Cost Recovery System (ACRS) - ANSWERSUNMODIFIED system used for property placed in
service after 1980 and before 1987.
Alternative Straight-Line Depreciation System - ANSWERS• A MACRS system of depreciation using the
STRAIGHT-LINE method over an alternative recovery period.
• Choosing either Straight-Line methods for personal-type property, requires doing so for ALL assets in
that class placed in service in that year.
Asset - ANSWERSAn item of useful or valuable property.
Business Assets - ANSWERSAssets used in a trade or business or used to produce rental or royalty
income.
Business-Use Property - ANSWERSProperty used for the production of income.
Examples include rental houses, machinery, factories, office buildings and similar items.
Estimated (Useful) Life - ANSWERS• The period of time over which a depreciable asset will be used by a
particular taxpayer.
• The estimated useful life is used to determine the annual tax deduction for pre-1981 depreciation.
General Depreciation System - ANSWERSUsing the Half-Year convention, is the most widely used
depreciation method for tangible personal-type property.
General Straight-Line Depreciation System - ANSWERSA MACRS system of depreciation using the
STRAIGHT-LINE method over the normal MACRS recovery period for the asset.
, Listed Property - ANSWERSThe IRS publishes a list of assets that are subject to depreciation restrictions
under certain circumstances.
Listed Property Includes:
• Passenger automobiles 6,000 pounds or less, and any other property used for transportation.
• Property used for entertainment, recreation or amusement, including photographic, phonographic,
communication and video-recording equipment.
• Computers and related peripheral equipment.
NOTE: Cell phones are no longer listed property [2010]
Modified Accelerated Cost Recovery System (MACRS) - ANSWERS• Required method of depreciation for
assets placed in service after 1986.
• Computed on the Depreciation Worksheet and Form 4562.
Personal Property - ANSWERSAll property other than real estate.
Real Property - ANSWERSAlso known as real estate, includes land, buildings and their structural
components.
Section 179 Expense Deduction (3) - ANSWERSAn election to treat the cost of certain qualified property
as a currently deductible expense rather than as a capital expenditure.
FOR 2010 AND 2011 ONLY:
• $500,000 of the cost of qualified tangible personal property expenditures, phases out at $2,000,000.
• $250,000 of the cost of qualified real property expenditures.
Special Depreciation Allowance (3) - ANSWERS• A special first-year depreciation allowance for most new
personal property acquired and placed in service after September 10, 2001 and before January 1, 2005.
• An additional deduction for 30% or 50% of the unadjusted basis of the asset.
• Assets placed in service after 2009 are not eligible for this bonus.
Straight-Line Depreciation Method (2) - ANSWERS• The most commonly used method of depreciation
prior to 1981.
Answers 100% Correct!!
Accelerated Cost Recovery System (ACRS) - ANSWERSUNMODIFIED system used for property placed in
service after 1980 and before 1987.
Alternative Straight-Line Depreciation System - ANSWERS• A MACRS system of depreciation using the
STRAIGHT-LINE method over an alternative recovery period.
• Choosing either Straight-Line methods for personal-type property, requires doing so for ALL assets in
that class placed in service in that year.
Asset - ANSWERSAn item of useful or valuable property.
Business Assets - ANSWERSAssets used in a trade or business or used to produce rental or royalty
income.
Business-Use Property - ANSWERSProperty used for the production of income.
Examples include rental houses, machinery, factories, office buildings and similar items.
Estimated (Useful) Life - ANSWERS• The period of time over which a depreciable asset will be used by a
particular taxpayer.
• The estimated useful life is used to determine the annual tax deduction for pre-1981 depreciation.
General Depreciation System - ANSWERSUsing the Half-Year convention, is the most widely used
depreciation method for tangible personal-type property.
General Straight-Line Depreciation System - ANSWERSA MACRS system of depreciation using the
STRAIGHT-LINE method over the normal MACRS recovery period for the asset.
, Listed Property - ANSWERSThe IRS publishes a list of assets that are subject to depreciation restrictions
under certain circumstances.
Listed Property Includes:
• Passenger automobiles 6,000 pounds or less, and any other property used for transportation.
• Property used for entertainment, recreation or amusement, including photographic, phonographic,
communication and video-recording equipment.
• Computers and related peripheral equipment.
NOTE: Cell phones are no longer listed property [2010]
Modified Accelerated Cost Recovery System (MACRS) - ANSWERS• Required method of depreciation for
assets placed in service after 1986.
• Computed on the Depreciation Worksheet and Form 4562.
Personal Property - ANSWERSAll property other than real estate.
Real Property - ANSWERSAlso known as real estate, includes land, buildings and their structural
components.
Section 179 Expense Deduction (3) - ANSWERSAn election to treat the cost of certain qualified property
as a currently deductible expense rather than as a capital expenditure.
FOR 2010 AND 2011 ONLY:
• $500,000 of the cost of qualified tangible personal property expenditures, phases out at $2,000,000.
• $250,000 of the cost of qualified real property expenditures.
Special Depreciation Allowance (3) - ANSWERS• A special first-year depreciation allowance for most new
personal property acquired and placed in service after September 10, 2001 and before January 1, 2005.
• An additional deduction for 30% or 50% of the unadjusted basis of the asset.
• Assets placed in service after 2009 are not eligible for this bonus.
Straight-Line Depreciation Method (2) - ANSWERS• The most commonly used method of depreciation
prior to 1981.
