EA2 Study Unit 06 - Uniform Capitalization Rules Quiz

Which of the following costs must be capitalized when constructing real or tangible personal property?

What costs are allocated to land when demolishing a structure?

Which of the following is an example of an indirect cost that should not be capitalized?

Under which circumstance do uniform capitalization rules generally not apply?

Which of the following expenses is specifically allowed as a deduction rather than being capitalized?

Uniform Capitalization Rules

Costs of constructing or acquiring property for use in business or sale are capitalized.
Direct and most allocable indirect costs related to preparing property for use are included, such as permits, materials, equipment rental, service compensation (minus work opportunity credit), and architect fees.
Demolition costs and the adjusted basis of the structure being demolished are allocated to the land.
Construction period interest and taxes are part of the building cost.
Indirect costs like marketing, selling, advertising, and various research costs are not capitalized.
Companies with average annual gross receipts of less than $29 million for the past 3 years aren't subject to uniform capitalization rules
Uniform capitalization rules don't apply to personal-use property.
Qualified creative expenses for freelance writers, photographers, or artists are excluded.
Property produced under long-term contracts are also excluded.
Deductible research and development expenses are not subject to the rules.
Intangible drilling and development costs, timber, ornamental trees (over 6 years old), and animals are excluded.
Selling, marketing, advertising, and distribution costs are excluded.

Test your understanding of uniform capitalization rules as they relate to business property and costs. This quiz covers key aspects including which costs are capitalized and the exclusions that apply. Dive into the details of construction costs, indirect costs, and specific exemptions.