15-Hour California Real Estate Tax Law Course (Qualifying Education) Practice Test

Question: 1 / 400

California conforms to the Federal MACRS recovery period for which type of property?

Residential real property

Nonresidential real property

California conforms to the Federal Modified Accelerated Cost Recovery System (MACRS) recovery period for nonresidential real property. Under MACRS, nonresidential real property has a depreciation recovery period of 39 years, which aligns with federal tax guidelines. This allows property owners to recover the cost of their investments in a structured manner over a specific time frame, facilitating better cash flow management.

The recovery period for residential real property is typically shorter, at 27.5 years, which is why it does not align with the conforming principles for nonresidential property. Intangible assets and vehicles are also classified differently under federal tax law, with their depreciation schedules and methods varying significantly from real property. Therefore, nonresidential real property is the correct choice as it matches California's conformance with the federal MACRS guidelines.

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Intangible assets

Vehicles

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