Answer the following statements true (T) or false (F)
1. A calendar-year taxpayer places in service one new piece of equipment this year on March 1. The asset cost $600,000. For this first year, the taxpayer will base the depreciation deduction on 10 months.
2. MACRS recovery property includes tangible personal and real property that is used in a trade or business.
3. Under the MACRS system, automobiles and computers are classified as seven-year property.
4. In computing MACRS depreciation in the year of disposition of personal property used in a trade or business, the half-year convention must be applied to the amounts in the tables if the half-year convention was used in the year the asset was placed into service.
5. Intangible assets are subject to MACRS depreciation.
1. FALSE
The half-year convention, which assumes that all asset acquisitions occur at midpoint of the tax year, is used.
2. TRUE
Both tangible personal and real property used in a trade or business can be depreciated under MACRS.
3. FALSE
Automobiles and computers are five-year property.
4. TRUE
The half-year convention applies in the year the asset is placed in service and the year it is taken out of service.
5. FALSE
Amortization is used for cost recovery of intangible assets.
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