Berly Company Transferred an Old Asset with a $12,300 Adjusted

question 59

Multiple Choice

Berly Company transferred an old asset with a $12,300 adjusted tax basis in exchange for a new asset worth $20,000. Which of the following statements is false?

• A) The old asset's FMV is $20,000.
• B) If the exchange is nontaxable, Berly's tax basis in the new asset is $12,300.
• C) If the exchange is taxable, Berly's recognized gain is $7,700.
• D) None of these statements are false.

---

Definitions:

Amended Tax Return

A tax return filed to correct inaccuracies or add new information to a previously filed return, often resulting in a different tax liability.

Replacement Period

The specified time frame within which property must be replaced to defer recognition of gains for tax purposes.

Recognized Gain

The portion of a capital gain that must be reported as income for tax purposes.

Excluded Gain

Profit from the sale of an asset that can be exempt from taxes, often related to home sales under specific Internal Revenue Code sections.