(TCO 10) The tax basis of an asset includes:
the fair market value of property received in a non-taxable exchange.
the fair market value of services given in exchange.
the amount of debt relief given in the exchange.
All of the above (General Feedback:
Question 2.(TCO 10) In general, an expenditure must be capitalized for tax purposes if:
it creates or enhances an asset with a useful life of one taxable year.
it results in no long-term benefit to the firm.
tax treatment of the expenditure is certain.
None of the above (General Feedback:
Question 3.(TCO 10) On December 15, a calendar year taxpayer placed in service $100,000 of five-year recovery property. If this was in addition to another $250,000 of assets placed into service early in the year, it will be subject to:
the mid-quarter convention.
the mid-month convention.
the half-year convention.
Question 4.(TCO 10) Bent Pretzel Inc. sold a building that it held for investment for several years. In this transaction, Bent Pretzel received land that it will use in its business. The FMV of the building is $80,000 and the value of the land is $80,000 too. The adjusted basis of the building is $55,000 and the land is $30,000.
What is Bent Pretzel's recognized gain?
$55,000
$25,000
$80,000
Question 5.(TCO 10) In a qualifying like-kind exchange, Van Halen exchanges musical equipment with an adjusted basis of $350,000 (fair market value of $300,000) for other musical equipment.
What is his basis in the new equipment?
$200,000
$225,000
$350,000
$230,000 (General Feedback:
Chapter 9. The FMV of the property received transfer basis ($300,000) plus the loss not recognized ($50,000).