Interest May Be Included in the Acquisition Cost of a Plant

question 72

Multiple Choice

Interest may be included in the acquisition cost of a plant asset

• A) during the construction period of a self-constructed asset.
• B) if the asset is purchased on credit.
• C) if the asset acquisition is financed by a long-term note payable.
• D) if it is a part of a lump-sum purchase.

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Definitions:

At-risk Amount

The investment in money or other property at risk in an activity, determining the deductible loss limit.

Passive Loss Rules

Tax provisions limiting the amount of loss investors can claim from passive activities, such as rental properties, to offset other income.

Income

Funds acquired regularly from labor or investment returns.

At-risk Amount

The maximum value taxpayers are at risk of losing in an investment, affecting the deductible loss limit in tax declarations.