Eliot Inc Transferred an Old Asset with a $53,100 Adjusted Tax

question 15

Multiple Choice

Eliot Inc. transferred an old asset with a $53,100 adjusted tax basis plus $5,000 cash in exchange for a new asset worth $75,000. Which of the following statements is false?

• A) The old asset's FMV is $70,000.
• B) If the exchange is nontaxable, Eliot's recognized gain is $5,000.
• C) If the exchange is nontaxable, Eliot's tax basis in the new asset is $58,100.
• D) None of these statements are false.

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Definitions:

Fixed Asset Turnover Ratio

A financial metric that measures a company's ability to generate net sales from fixed assets like property, plant, and equipment.

Cost Basis

The original value of an asset for tax purposes, usually the purchase price, adjusted for stock splits, dividends, and return of capital distributions.

Appraisal Value

An estimation of a property's market value based on an appraiser’s knowledge, experience, and analysis of the property.

Mortgage

A loan typically used to purchase real estate, where the property itself serves as collateral for the loan.