Itak Company Transferred an Old Asset with a $44,300 Adjusted

question 17

Multiple Choice

Itak Company transferred an old asset with a $44,300 adjusted tax basis in exchange for a new asset worth $48,000 and $3,000 cash.Which of the following statements is false?

• A)If the exchange is taxable,Itak recognizes a $6,700 gain.
• B)If the exchange is nontaxable,Itak recognizes a $3,000 gain.
• C)If the exchange is nontaxable,Itak's tax basis in the new asset is $44,300.
• D)None of the statements is false.

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Definitions:

Infrequent Occurrence

Events or transactions that do not happen often and, therefore, are not expected to recur in the foreseeable future.

Major Restructuring

A significant organizational change involving the modification of a company's operations, often including downsizing, cost-cutting measures, or strategic redirection to improve efficiency and performance.

Transitory Items

Components of a financial statement that are not expected to recur in the foreseeable future, often removed for pro forma or adjusted analysis.

Income Statement

A financial document summarizing a company's revenues, expenses, and profit over a specific period.