37) 37) Jimmy acquires an oil and gas property interest for $600,000. Jimmy expects to recover 200,000 barrels of oil. Intangible drilling and development costs are $160,000 and are charged to expense. Other expenses are $40,000. During the year, 25,000 barrels of oil are sold for $800,000. Jimmy's depletion deduction is A) $120,000. B) $600,000 C) $160,000. D) $75,000. 38) 38) An accrual basis taxpayer wishes to take advantage of the recurring item exception to the economic performance requirement in order to accelerate a deduction. Which of the following is not correct regarding the taxpayer's ability to apply the recurring item exception? A) The taxpayer consistently treats similar items meeting these criteria in the same manner. B) The amount is immaterial or the accelerated deduction results in better matching of income and expense. C) The independent all-events test need not be satisfied. D) Payment is made within 8.5 months after the close of the tax year. 39) CPA Associates, a cash-basis partnership with a calendar tax year, signs a contract for a 20-month 39) subscription to an online tax research service, effective as of April 1. The firm pays the full $10,000 subscription bill on the April 1, 2021 subscription start date. For 2021 the firm can deduct A) $5,500 B) $4,500 C) $10,000. D) $5,000. 41) 41) All of the following qualify as a like-kind exchange except A) a printer used in trade or business for a computer used in trade or business. B) an apartment building held for investment for a warehouse used in a trade or business. C) improved real estate held for investment for unimproved real estate held for investment. D) all of the exchanges qualify as like-kind exchanges. 42) 42) Bobbie exchanges farmland (adjusted basis $160,000) for other farmland that has a FMV of $140,000. Bobbie also receives $30,000 cash. Bobbie's basis in the new farmland is A) $170,000. B) $130,000 C) $140,000. D) $160,000. 43) 43) Eric purchased a building in 2010 that he uses in his business. Eric uses the straight-line method for the building. Eric's original cost for the building is $420,000 and cost-recovery deductions are $120,000. Eric is in the top tax bracket and has never sold any other business assets. If the building is sold for $560,000, the tax results are A) $260,000 unrecaptured Sec. 1250 gain, all taxable at 25%. B) $260,000 Sec. 1231 gain, of which $120,000 is unrecaptured Sec. 1250 gain taxable at 25% and the $140,000 balance is taxable at 20%. C) $120,000 Sec. 1245 ordinary income, $140,000 Sec. 1231 gain taxable at 20%. D) $260,000 Sec. 1231 gain, all taxable at 20%. 7