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Depreciation Quiz for Tax Gurus


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1. Depreciation is most similar to:

A. Depression
B. Free gift from Uncle Sam
C. Loan
D. PMI payments 		 

2. Depreciation recapture:

A. Is a new thriller starring Bruce Willis
B. Applies to commercial properties only
C. Applies to all depreciated properties
D. Applies even if no depreciation was taken
 

3. Depreciation starts:

A. On the day of closing
B. On the day of "ready for rent"
C. On the day 1st lease is signed
D. On the day 1st tenant moves in 		 

4. Depreciation ends:

A. After the specified number of years
B. When the property is destroyed
C. When the property is sold
D. All of the above
 

5. A property is "non-residential" (39 yrs):

A. If it has more than 4 units
B. If it is listed as "commercial" on tax roll
C. If one of the tenants is a business
D. None of the above 		 

6. Land/building allocation must be based on:

A. County appraisal
B. Statement from a licensed Realtor
C. IRS-approved comps
D. Any method that you consider reasonable
 

7. Used appliances are depreciated:

A. Based on their actual cost
B. Based on their FMV (fair market value)
C. Based on the cost of similar new ones
D. Either one of the above methods 		 

8. Cost of a new roof is depreciated over:

A. 5 years, from the day it's installed
B. 5 years, after the building is fully depreciated
C. 27.5/39 years, from the day it's completed
D. the remainder of the building's 27.5/39 years
 

9. Cost segregation creates tax savings by:

A. Accelerating depreciation
B. Converting depreciation into expense
C. Increasing the value of the property
D. Avoiding depreciation recapture 		 

10. Missed depreciation can be recovered:

A. Partially, by amending the last 3 tax returns
B. In full, as long as the property is not sold
C. In full, even after the property is sold
D. Cannot be recovered at all

              Check your answers