P2-U08 · PART 2 · SOURCE CYCLE 2026-2027
Depreciation and Amortization
How to complete this unit
This unit uses 28 source-gated recall cards and 28 admissible practice questions. Complete the sequence in order; the unreleased wiki prose remains outside the learner path.
- 1 · LearnBuild the rule
Answer each recall prompt before opening it. Then learn the exact rule, test the controlling facts through four quick challenges, explore common questions, and finish with one own-words teach-back.
- 2 · ApplyUse it in context
Complete at least 20 mapped questions over two sessions. Review the explanation even when the answer is correct.
- 3 · ProveTest readiness
Use the Part 2 mock under time pressure. Return here for every flagged or missed concept before the next attempt.
Verified recall questions
Only cards whose complete question and answer were checked against exact primary-authority evidence appear here. Stable unit ownership gathers this lesson across 1 textbook collection.
Q1.Alder buys qualifying off-the-shelf computer software. For which deduction can it be qualifying property?
Section 179
Q2.Alder acquired and placed qualifying property in service after January 19, 2025. What special depreciation percentage can generally apply?
100%
Q3.Which statement applies when Alder buys business land?
Land itself cannot be depreciated
Q4.What planning choice does section 179 provide for qualifying property?
Elect a current section 179 deduction instead of recovering the cost through depreciation
Q5.Which of the following types of property is generally used for entertainment, recreation, or amusement and therefore classified as "listed property?"
Photographic equipment
Q6.Which statement is correct regarding 100% bonus depreciation for 2025?
Certain qualified property acquired and placed in service after January 19, 2025, can qualify for 100% bonus depreciation.
Q7.Under the MACRS half-year convention, when is property treated as placed in service?
On the midpoint of the tax year it is placed in service.
Q8.What MACRS recovery period generally applies to computers and peripheral equipment?
5 years.
Q9.What is the section 179 deduction?
An election to deduct all or part of the cost of certain qualifying property, up to a limit, in the year you place the property in service.
Q10.Which of the following types of property can be depreciated?
Office building used by a business
Q11.If a business elects section 179 and does not elect-out of bonus depreciation in the same year, bonus depreciation is taken:
After a section 179 deduction is taken.
Q12.What is the Modified Accelerated Cost Recovery System (MACRS)?
The current tax depreciation system in the United States.
Q13.Zehra is a licensed family therapist who works out of her home. She purchases a new computer for $1,100. She uses the computer 75% for her business and 25% for personal purposes. Ignoring any income limitations, what is Zehra's section 179 deduction?
$825
Q14.Hamid owns a construction company. He purchases used construction equipment from his grandfather and places it in service in 2025 as part of a bona fide business transaction. The equipment costs $10,500. Which of the following statements is correct?
Hamid can claim regular MACRS depreciation on the equipment.
Q15.Hitoshi owns a pizza restaurant by becoming a franchise owner of Papa's Yummy Pizza, a popular Italian food chain. After being in business for six months, Hitoshi purchases new kitchen equipment costing $190,000. He also purchases a new point-of-sale computer system for use in his restaurant at a cost of $15,000. The initial cost of franchise rights, payable to Papa's Yummy Pizza was $25,000. Therefore, Hitoshi has the following outlays for the year: New POS computer system: $15,000 New kitchen equipment: $190,000 Franchise rights: $25,000 Total asset purchases: $230,000 He wants to take section 179 for all his qualifying asset purchases. If his taxable income, before any potential section 179 deduction, is $590,000, what is his allowable section 179 deduction for the year?
$205,000
Q16.On April 1, 2025, Klaus buys a medical office building that he plans to rent out to business tenants. He made several repairs to the building and had it ready for rent on August 1, 2025. He advertised the property in the newspaper but did not get his first tenant until December 1, 2025. The tenant gave Klaus the deposit and signed the lease on January 1, 2026, and finally moved in on that date. Which month can he begin depreciating the property?
August 2025
Q17.Which of the following would not qualify for a depletion deduction?
Dairy farm
Q18.Using MACRS, what is the recovery period for depreciating a commercial office building?
39 years
Q19.Which of the following vehicles is considered "listed property" for tax purposes?
A compact passenger automobile
Q20.Which of the following assets would be amortized?
Patent
Q21.Which of the following types of business property qualifies for the section 179 deduction?
A delivery truck.
Q22.Alessandra is a 1% owner in an oil well. She receives oil and gas royalties during the year from her interest in the activity. She does not work in the business at all; she is merely an investor. The oil company pays her $25,000 in gross royalties during the year. For oil and gas royalty owners, percentage depletion is calculated using a rate of 15% of gross income. The only other income she has for the year is $45,000 in wages. Based on this information, what would Alessandra's depletion deduction be, and how would it be reported?
Depletion deduction of $3,750, reported on Schedule E.
Q23.Edvin is a sole proprietor who buys a new cell phone for $1,720. Based on his phone records, Edvin uses the cell phone 45% for business use and 55% for personal use. Ignoring any income limitations, what is his section 179 deduction?
$0
Q24.Friendship Dentistry, Inc. bought out Cavity Busters Dentistry. The sale included dental supplies, furniture, fixtures, dental equipment, and goodwill of the existing practice. The contract also included a do-not-compete clause. The contract details of the sale are listed below. Contract Purchase Details Dental Supplies: $4,000 Furniture: $16,500 Fixtures: $10,800 Dental equipment: $15,500 Goodwill and customer list: $60,000 A covenant not-to-compete: $40,000 Gross Sales Price: $146,800 Based on this information, what is the total dollar amount of the assets that must be amortized? How long is the required amortization period?
The goodwill and covenant not-to-compete (\$100,000) must be amortized over 15 years.
Q25.What determines the number of years over which the cost of a depreciable asset can be recovered under MACRS?
The asset's class
Q26.Guthrie Construction, Inc. is a calendar-year, accrual-basis corporation that specializes in constructing office buildings. Guthrie Construction purchased a diesel truck on November 1, 2025, that had to be substantially modified for use in the business. Guthrie Construction accepted delivery of the modified truck, and it was available for use on January 10, 2026 (the following year). The truck was first used on a construction site on February 3, 2026. The truck is used \(100\%\) for business. In what month can the company start depreciating the truck?
January 2026
Q27.Gilbert is a self-employed farmer who purchases several assets during the year to use for his farming business. Which of the following assets is Gilbert not allowed to depreciate?
Farmland
Q28.Which of the following assets is eligible for Bonus Depreciation?
Qualified film production property
Ready to move on?
- ▸ Explain at least 80% of these 28 rules without opening the answer, twice on different days.
- ▸ Score 80% across 20 or more mapped questions over two sessions, not one memorized round.
- ▸ Complete a timed Part 2 mock and return to this unit if its concepts remain flagged or missed.
Use these checks to choose your next study action. They do not predict a PSI scaled score.