AC 309 Unit 4 Chapter Problems

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UNIT 4
Perform Chapter 8 Problems 24, 33, 35, 36 & 45 (Pages 8-40, 41 & 42 in the text) and
Chapter 9 Problems 3, 9, 15, 27 & 28 (Pages 9-37, 38, 39 & 40 in the text)
Chapter 8
24. LO.4 Discuss how the limits on cost recovery apply to listed property.
33. LO.2 Orange Corporation acquired new office furniture on August 15, 2014, for
$210,000. Orange elects immediate expensing under § 179. Orange does not claim any
available additional first-year depreciation. Determine Orange’s cost recovery for 2014.
35. LO.2 Juan acquires a new 5-year class asset on March 14, 2014, for $200,000. This is
the only asset Juan acquired during the year. He does not elect immediate expensing
under § 179. He does not claim any available additional first-year depreciation. On July 15,
2015, Juan sells the asset.
45. LO.2, 3, 9 Lori, who is single, purchased 5-year class property for $31,000 and 7-year
class property for $42,000 on May 20, 2014. Lori expects the taxable income derived from
her business (without regard to the amount expensed under § 179) to be about $100,000.
Lori wants to elect immediate § 179 expensing, but she doesn’t know which asset she
should expense under § 179. She does not claim any available additional first-year
depreciation.
Chapter 9

2. 3. LO.1 Mason performs services for Isabella. In determining whether Mason is an
employee or an independent contractor, comment on the relevance of each of the factors
listed below.
a. Mason performs services only for Isabella and does not work for anyone else.
9. LO.2 In 2012, Emma purchased an automobile, which she uses for both business and
personal purposes. Although Emma does not keep records as to operating expenses
(e.g., gas, oil, and repairs), she can prove the percentage of business use and the miles
driven each year. In March 2014, Emma seeks your advice as to what income tax benefit, if
any, she can derive from the use of her automobile. What would you suggest?
15. LO.3 Rick is scheduled to go to London on business and would like to do some
sightseeing while there. A colleague advises him that to maximize his deductible
expenses, he should plan the business and personal portions of the trip carefully to make
effective use of weekends and holidays. What is meant by this advice?
27. LO.10 Comment on the deductibility of each of the following items:
28. LO.2, 3. During the year, Olivia holds two jobs. After an eight-hour day at the first job,
she works three hours at the second job. On Fridays of each week, she returns home for
dinner before going to the second job. On the other days (Monday through Thursday), she
goes directly from the first job to the second job, stopping along the way for a meal. The
mileage involved is as follows:
Home to first job 15
First job to second job 18
Home to second job 20