Tauber Inc

question 107

Multiple Choice

Tauber Inc.and J&I Company exchanged like-kind production assets.Tauber's asset had a $17,500 FMV and $3,000 adjusted tax basis,and J&I's asset had a $19,000 FMV and a $9,000 adjusted tax basis.Tauber paid $1,500 cash to J&I as part of the exchange.Which of the following statements is false?

• A)Tauber's realized gain is $14,500 and recognized gain is -0-.
• B)J&I's realized gain is $10,000 and recognized gain is -0-.
• C)Tauber's basis in its newly acquired asset is $4,500.
• D)J&I's basis in its newly acquired asset is $9,000.

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Definitions:

Sole Proprietor

A business owned and managed by one individual where there is no legal distinction between the owner and the business entity.

Creditor

An individual or entity to whom money or its equivalent is owed by another individual or entity, known as the debtor.

Professional Corporation

Identical to a business corporation in most respects. A professional corporation is formed by filing with the secretary of state, and it is managed by a board of directors, unless a statute permits it to be managed like a partnership. The rigid management structure makes the professional corporation inappropriate for some smaller professional practices.

Personal Liability

Legal responsibility of an individual to settle debts or legal judgments from their assets, not protected by business structures or limited liability.