In April of 2012,Brandon Acquired Five-Year Listed Property (Not an Automobile)for

question 90

Multiple Choice

In April of 2012,Brandon acquired five-year listed property (not an automobile) for $30,000 and used it 70% for business.No election was made regarding Sec.179 and bonus depreciation was not available.In 2013,his business use of the property dropped to 40%.Which of the following statements is true?

• A)The change does not affect Brandon's previous depreciation.
• B)Brandon must recapture $2,100 as ordinary income.
• C)Brandon must recapture $4,200 as ordinary income.
• D)Brandon must amend the previous tax return and recompute depreciation.

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Definitions:

Preexisting Duty Rule

A principle in contract law that holds an existing duty does not constitute consideration for a new promise.

Unforeseen Circumstances

Events or conditions that could not have been reasonably anticipated and that may affect the performance of contractual obligations.

Ethical

Pertaining to or dealing with morals, the principles of morality concerning right and wrong or good and bad behavior.

Illusory Promise

A statement that appears to be a promise but is too vague or lacks commitment to be legally binding and enforceable as a contract.