[17] Residential rental property that was placed in service during the current year using MACRS is depreciated over how many years, using which depreciation method and convention? A. 15 years, 150%-declining-balance method, half-year convention. B. 27.5 years, straight-line method, mid-month convention. C. 39 years, straight-line method, mid-month convention. D. 40 years, 200%-declining-balance method, half-year convention.

[18] The Bearcat Corporation purchased an apartment building in October of the current year. The cost of the building was $4,000,000 and its estimated life was 40 years. Corporate management wants to know the alternative methods of deducting the cost of the building for tax purposes. The company may use the straight-line method over 27.5 years or can elect to use the

A. Straight-line method over a recovery period of 35 or 45 years. B. Straight-line method over a recovery period of any length between 27.5 and 45 years. C. Straight-line method over a recovery period of 40 years. D. Declining-balance method at 125% of the straight-line rate using a recovery period of 27.5 or 40 years.

[19] When computing the depreciation deduction under the MACRS rules, salvage value should be subtracted from the basis before computing the allowable deduction.

A. True. B. False.

[20] All of the following statements in respect to the amortization of start-up costs are true, except

A. If your attempt to go into business is not successful, the costs you had as a result of a preliminary investigation of a business may be deducted in full in year of abandonment. B. Start-up costs include salaries and wages for employees who are being trained and for their instructors. C. If you have both start-up and organizational costs, you may elect a period for start-up costs that is different from the period you elect for organizational costs, as long as both are 180 months or more. D. To be amortizable, a start-up cost must be a cost that would be deductible if it were paid or incurred to operate an existing trade or business and it must be paid or incurred by you before you actually begin business operations.