Under the Like-Kind Exchange Rules, When Like-Kind Property Is Traded

question 55

Multiple Choice

Under the like-kind exchange rules, when like-kind property is traded for like-kind property, a loss on a trade-in is:

• A)recognized and treated as a capital loss.
• B)recognized and treated as an ordinary loss.
• C)not recognized and increases the basis of the replacement property.
• D)not recognized and decreases the basis of the replacement property.
• E)none of the above.

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Definitions:

Technological Improvements

Advances in technology that enhance productivity, efficiency, or quality in goods and services.

Long Run

In economics, the Long Run is a period during which all factors of production and costs are variable, allowing for full industry adjustment to changes.

Per-worker Production Function

A mathematical representation showing how the amount of output produced per worker varies with the amount of capital or other inputs used per worker.

Quantity of Capital

The total assets, both physical (such as machinery and buildings) and financial, that individuals or businesses use to produce goods and services.