4 1. Last year, Grove Corporation incurred the following expenditures in the development of a new plant process: Salaries $200,000 Materials 40,000 Utilities 10,000 Quality control testing costs 50,000 Market survey costs 10,000 Depreciation of equipment 15,000 During the current year, benefits from the project began being realized in July. If Grove Corporation elects a 60 month deferral and amortization period, determine the amount of the deduction for the current year. $26,500. $27,500. $32,500 $65,000. Question 5 1. On June 14, 2012, Jamie purchased a used automobile that cost $18,000. The car is used 70% for business and 20% for personal use. In 2013, he used the automobile 30% for business and 70% for personal use. Determine the cost recovery recapture for 2013. $1,800 $1,260 $952 $-0- Question 6 1. Diana purchased office furniture on September 20, 2013, for $200,000. On October 10, she purchased business computers for $160,000. Diana did not elect to expense any of the assets under 179, nor did she elect straight-line cost recovery. Diana did elect not to take additional first-year depreciation. Determine the cost recovery deduction for the business assets for 2013. $18,000 $29,428 $50,140 $60,580 Question 7 1. Fern Company acquires a new machine (seven-year property) on January 10, 2013, at a cost of $600,000. Fern makes the election to not take additional first-year depreciation, and elects to expense the maximum amount under 179. No election is made to use the straight-line method. Determine the total deductions in calculating taxable income related to the machine for 2013 assuming Fern has taxable income of $700,000. $500,000 $514,290 $557,145 $600,000 Question 8 1. On June 1, 2012, Josh purchased a used automobile that cost $24,000. The car is used 60% for business and 40% for personal use. (Assume this percentage is maintained for the life of the car.) Determine the cost recovery deduction for 2013. $3,060 $4,608 $4,900 $5,100 Question 9 1. On January 15, 2013, Pamela purchased the rights to a mineral interest for $5,000,000. At that time, it was estimated that the recoverable units would be 2,500,000. During the year, 400,000 units were mined and 350,000 units were sold for $5,000,000. Pamela incurred expenses during 2013 of $3,000,000. The percentage depletion rate is 22 percent. Determine Pamela's depletion deduction for 2013. $-0- $700,000 $1,100,000 $1,000,000 Question 10 1. Char Charley is the city sales manager for Circle Pie, a national pizza franchise. Every working day, Charley drives his car as follows: Miles Home to office 4 Office to Circle Pie No. 1 8 Circle Pie No. 1 to No. 2 14 Circle Pie No. 2 to No. 3 6 Circle Pie No. 3 to home 6 Charleyf s deductible mileage is: 0 miles. 6 miles. 28 miles. 38 miles. Question 11 1. Jeremiah works as an auditor for a major CPA firm. During the months of August and September of each year, he is permanently assigned to the team auditing Eagle Corporation. As a result, every day he drives from his home to Eagle and returns home after work. Mileage is as follows: Miles Home to office 5 Home to Eagle 14 Office to Eagle 8 For the period of August and September, Jeremiahs deductible mileage for each workday is: 0. 10. 27. 28. Question 12 1. During the year, Samuel went from Albany to Sacramento. After seven days of business meetings, he took three days of vacation to go sightseeing. Samuel s expenses for the trip are as follows: Air fare $ 500 Lodging (10 days X $80) 800 Meals (10 days X $60) 600 Airport limo 60 Samuelt s deduction is: $1,180 $1,330 $1,390 $1,960 Question 13 1. Harlow, who holds a bachelor of education degree, is a middle school teacher in Cody, Wyoming. The school board recently changed its minimum education requirement by prescribing five years of college training. Existing teachers, such as Harlow, are allowed 5 years in which to acquire the additional year of education. Pursuant to this requirement, Harlow spends her 2013 summer break attending Wyoming State University taking education courses. Her expenses are as follows: Books and tuition $6,500 Meals 800 Lodging 800 Laundry while in travel status 350 Transportation 950 Her education expense deduction is: $9,400 $9,000 $8,650 $6,500 Question 14 1. Diego and Katelyn, both age 66, are married and together have AGI of $30,000. They have two dependents and file a joint return. Each pays $2,400 for hospitalization insurance. During the year, they paid the following amounts for medical care: $8,000 in doctor and dentist bills and hospital expenses, and $1,500 for prescribed medicine and drugs. In December, they received an insurance reimbursement of $3,700 for hospitalization. Determine the deduction allowable for medical expenses paid during the year. $14,500 $12,250 $10,800 $8,350 Question 15 1. During 2013, Aris paid the following taxes: Taxes on residence (for the period from March 1 through August 30, 2013) $8,178 State motor vehicle tax (based on the value of the personal use automobile) 250 Aris sold his personal residence on May 30, 2013, under an agreement in which the real estate taxes were not prorated between the buyer and the seller. What amount qualifies as a deduction from AGI for 2013 for Aris? $8,428 $8,178 $4,250 $4,000