Joan Gives an Asset Valued at $12,000 with a Basis

question 28

Multiple Choice

Joan gives an asset valued at $12,000 with a basis of $10,000 to Mary;Joan dies six-months later leaving an asset valued at $10,000 with a basis of $12,000 to Larry.What are Mary's' and Larry's bases in these assets?

• A)Mary = $12,000;Larry = $12,000
• B)Mary = $12,000;Larry = $10,000
• C)Mary = $10,000;Larry = $12,000
• D)Mary = $10,000;Larry = $10,000

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Definitions:

Utility Function

A mathematical representation of how a consumer's preferences between different goods or services translate into levels of satisfaction or utility.

Initial Endowment

Refers to the initial allocation of goods, resources, or wealth that an individual or entity possesses before any transactions.

Pareto Efficient

A situation where no individual or preference criterion can be better off without making at least one individual or preference criterion worse off.

Initial Endowment

The initial allocation of resources, money, or goods that an individual, institution, or country possesses.