Luce Company Exchanged Investment Land for a Building to Be

question 33

Multiple Choice

Luce Company exchanged investment land for a building to be used in its business. Luce's gain on the exchange was nontaxable (because the assets were like-kind) but was included in financial statement income. Which of the following statements is false?

• A) Luce's book basis in the building received is the building's cost (FMV).
• B) Luce's tax basis in the building received equals its tax basis in the land surrendered.
• C) Luce's future depreciation deductions with respect to its tax basis in the building will be different from future depreciation expense for financial statement purposes.
• D) None of these statements are false.

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Definitions:

Insurable Interest

The requirement in insurance policies that the holder must have a stake in the insured item or person that would result in financial loss if harmed.

Insurance

A financial product that provides protection against financial losses in exchange for premium payments, covering risks such as accident, illness, or property damage.

Meaning

The significance or interpretation of a word, phrase, sentence, or symbol.

Bonding

The process of creating a secure financial guarantee, typically via a bond, that protects against losses from failure to meet contractual obligations or perform duties.