le or False Questions - Circle True or False 1. Tor F - A purchased asset's initial tax basis can exceed its purchase price. 2. T or F - When the mid-quarter convention applies to determine MACRS depreciation expense for an asset in the year the asset is acquired, the mid-quarter convention also applies to determine MACRS depreciation expense for the asset in the year the asset is sold. 3. Tor F - When testing to determine whether a business taxpayer must use the mid- quarter convention to determine MACRS depreciation expense for assets acquired during 2019, real property acquired during 2019 is excluded from both the numerator and the denominator of the fraction of assets acquired during the 4th quarter of the year. 4. Tor F - A self-employed individual must use a computer more than 50% for business purposes in order to use accelerated depreciation methods, such as Section 179 expensing, 100% bonus depreciation, and double-declining balance MACRS depreciation, to calculate depreciation expense on the computer. 5. Tor F - The tax rate applicable to unrecaptured $1250 gain is the greater of 25% or the marginal tax rate that would apply to the gain if it were treated as ordinary income. 6. T or F - When the $1231 look-back rule applies, a taxpayer reduces its net $1231 gain in the current year by unrecaptured net $1231 losses from the 5 prior years. 7. Tor F - An heir's tax basis in inherited property is equal to the lesser of (i) the fair market value of the property on the date of the decedent's death or (ii) the decedent's tax basis in the property on the date of death. 8. Tor F-Transactions classified as like-kind exchanges or involuntary conversions allow taxpayers to defer all or a portion of any realized gain, but do not permit taxpayers to permanently exclude any portion of a realized gain from gross income