Risa Exchanges an Office Building with a $600,000 Adjusted Basis

question 57

Multiple Choice

Risa exchanges an office building with a $600,000 adjusted basis for an apartment building with a $1,000,000 FMV and $200,000 of marketable securities.The other party indicates he had paid $175,000 for the securities a year earlier.What is Risa's basis for the securities?

• A)$0
• B)$175,000
• C)$200,000
• D)none of the above.

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Definitions:

Machine-Hours

A measure of production time using machinery, often used as a basis for allocating manufacturing overhead to products.

Overhead Cost

The indirect costs that are not directly tied to production or sales, such as rent, utilities, and office expenses.

Activity-Based Costing

A costing methodology that assigns overhead costs to products based on their consumption of activities.

Machine-Hours

A measure of production or work time, referring to the total hours a machine is operated in the performance of its tasks.