7. During 2020, Scottie Pippen (calendar taxpayer) acquires and places the following 5-year class properties in service.
|
Property |
Property Placement Date |
Cost |
|
Business computer |
April 16, 2020 |
$20,000 |
|
Business car |
December 1, 2020 |
$60,000 |
|
Total |
$80,000 |
Assume that (1) Scottie chooses declining balance (DB) cost recovery method, and (2) Scottie does not elect Sec. 179 deduction and does not claim for 50% additional first-year cost recovery deduction. Determine Scottie’s cost recovery deduction for 2020.
A. $8,000 B. $16,000 C. $7,500 D. $24,000 E. $28,800
9. Daisy’s warehouse is destroyed by a tornado. The warehouse has an adjusted basis of $200,000 when destroyed. Daisy receives an insurance reimbursement check for $300,000 and immediately reinvests $500,000 of the proceeds in a new warehouse. What is Daisy’s (1) recognized gain (loss) and (2) basis in the replacement warehouse, respectively, if Daisy chooses to defer all realized gain?
A. (1) = $100,000 (2) = $500,000 B. (1) = $100,000 (2) = $400,000
C. (1) = $0 (2) = $300,000 D. (1) = $0 (2) = $400,000
E. (1) = $0 (2) = $500,000
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