Roberto purchases two boats for $1,240,000 each during the year, for a total cost of $2,480,000. The
Question:
Roberto purchases two boats for $1,240,000 each during the year, for a total cost of $2,480,000. The boats are used for 100% business use and are considered 10 year MACRS property. He purchased a blue boat on May 15, 2020. He then purchased a red boat on December 20, 2020. How should Roberto allocate his 179 deduction for the year to maximize his cost recovery for his first year?
Group of answer choices
Roberto should allocate his 179 deduction evenly because it is required by tax law.
Roberto should allocate significantly more of his 179 deduction to the red boat because he can avoid using the mid-quarter convention.
Roberto should allocate all of his 179 deduction to the blue boat, because it will result in a greater cost recovery for his first year.
It is irrelevant how Roberto allocates his 179 deduction.
Front Range Cable Corporation has the following gains and losses from Section 1231 property during 2020:
- Casualty losses $(14,000)
- Casualty gains 5,000
- Section 1231 gains 9,000
- Section 1231 losses (6,000)
No net Section 1231 losses have been deducted as ordinary losses in prior years. How will this information affect Front Range's 2020 taxable income?
Group of answer choices
They will report a net section 1231 loss of $6,000.
They will report a capital loss of $9,000 and ordinary income of $3,000.
The transactions have no effect on taxable income.
Front Range will report an ordinary loss of $9,000 and a long-term capital gain of $3,000.
