Pipe Company Includes in Its Contracts a Provision That Reads

question 16

Multiple Choice

Pipe Company includes in its contracts a provision that reads, in large red letters, "There are no warranties that extend beyond the description on the face hereof." This disclaimer negates

• A)the implied warranty of fitness for a particular purpose.
• B)the implied warranty of merchantability.
• C)the implied warranty of title.
• D)none of the choices.

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Definitions:

Tax Consequences

The financial effects of transactions on tax liabilities, including how investments, income, or deductions affect taxes owed.

Basis

The initial value of an asset for tax purposes, usually the purchase price, used to calculate gains or losses when the asset is sold.

Recognized Gain

The profit realized from the sale or exchange of an asset over its adjusted basis.

Adjusted Basis

The net cost of an asset after adjusting for various tax-related items, such as improvements and sales.