1. Newton, a business owner, signed a ten-year lease beginning in July of 2017, and immediately paid...

Question:

1. Newton, a business owner, signed a ten-year lease beginning in July of 2017, and immediately paid rent for the remainder of 2017, all of 2018, and all of 2019. How much of the rent paid at the lease signing can be declared as a business expense on Schedule C of Newton's 2017 tax return?
a. All of it
b. The July 2017-June 2018 portion only
c. None of it
d. The 2017 portion only
2. Quanti Co., a calendar year taxpayer, purchased equipment for $5,000 on December 21, 2017, representing the company's only purchase of tangible personal property that took place during 2017. On its 2017 tax return, how many months of MACRS depreciation may Quanti Co. claim on the equipment, assuming it does not use
§ 179 (immediate expensing)?
a. One and a half months
b. One month
c. Six months
d. None
3. Joe purchased a van on February 1, 2017, for use in his business, Crew Airport Transport. The van was purchased for $30,000, has an estimated useful life of 10 years, and has a of $2,000. No other assets were put into service that year. What is Joe's MACRS depreciation for the van for 2017?
a. $2,567
b. $6,000
c. $10,500
d. $10,267
4. Dolly purchased and placed into service qualifying depreciable property in 2017 at a total cost of $2,280,000. Dolly has elected to take the § 179 deduction. What is Dolly's § 179 deduction for 2017?
a. $0
b. $260,000
c. $510,000
d. $1,770,000
5. In 2017, Christa purchased and placed into service five-year assets at a total cost of $2,290,000. If Christa elects both the § 179 deduction and additional first-year bonus depreciation, but does not elect the straight-line method, what is Christa's depreciation expense for tax purposes for the year, assuming a half-year convention?
a. $250,000
b. $510,000
c. $1,270,000
d. $1,474,000
6. Orange, Inc., a calendar year C corporation, has $800,000 of qualified production activities income (QPAI) and $950,000 of total taxable income in 2017, All of the QDPAI was produced by Orange's manufacturing plant, which relies mainly on a temporary employment agency for its workforce, employing only two W-2 employees who in aggregate earned $140,000 in 2017. Orange also has an office in Mexico, which is unrelated to its domestic manufacturing plant and which employs one W-2 employee, who earned $75,000 in 2017, What amount of domestic production activities deduction may Orange claim on its 2017 corporate tax return?
a. $73,350
b. $72,000
c. Depends on wages paid by employment agency
d. $70,000
Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...