Three types of cost recovery and the key descriptor 2. 1. Nature of property (tw

Question

Three types of cost recovery and the key descriptor 2. 1. Nature of property (two types) 3. Should personal property be depreciated? 4. Explain Allowed or Allowable 5. What is the basis when converting from personal to business 6. Explain the concept of class life as related to depreciation 7. What is the difference between SL and MACRS 8. When does residential real estate become non-residential real estate? 9. What is the Section 179 limit for 2017? 10. What are the three classifications of vehicle depreciation? 11. When do you use ADS? 12. What is the method and time for Amortization 13. List the two methods for Depletion

Explanation / Answer

1. Three types of cost recovery and the key descriptor:-

2. Nature of property:-

3. Should personal property be depreciated:-

No personal property can not be depreciated. You can only depreciate that portion of the asset dedicated to business use.

4. Explain allowed and allowable:-

The allowed cost recovery is the amount that was actually deducted whereas the allowable cost recovery is the amount that could have been deducted. Usually, the allowed cost recovery is equal to the allowable recovery, but if the taxpayer does not claim the allowable deduction, then the tax basis of the property decreases by the amount of the allowable deduction, regardless of whether the taxpayer claimed it or not.

Note:- as per chegg guidelines if more than one question is posted than we liable to answer only first four part.

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