Question

The cost of listed property that was initially not predominantly used for business must always be recovered via the straight-line method even if the property becomes predominantly used for business at some later date.

A. True
B. False

Answer 1

The cost of listed property that was initially not predominantly used for business does not have to be recovered via the straight-line method if it becomes predominantly used for business at a later date. The answer is B.

Step-by-step explanation:

The answer is B. False. When a property initially not predominantly used for business later becomes predominantly used for business, the owner has the option to switch to the accelerated cost recovery system (ACRS) or the modified accelerated cost recovery system (MACRS). Both of these methods allow for faster depreciation of the property compared to the straight-line method. Therefore, the owner is not obligated to stick to the straight-line method if the property's predominant use changes.