Koch Traded Machine 1 for Machine 2

question 100

Multiple Choice

Koch traded machine 1 for machine 2. Koch originally purchased machine 1 for $75,000 and machine 1's adjusted basis was $40,000 at the time of the exchange. Machine 2's seller purchased it for $65,000 and machine 2's adjusted basis was $55,000 at the time of the exchange. What is Koch's adjusted basis in machine 2 after the exchange?

• A) $40,000.
• B) $50,000.
• C) $55,000.
• D) $75,000.
• E) None of these.

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Definitions:

Duty To Exercise

The obligation to perform or engage in actions with due diligence and care under certain circumstances.

Rightful Possession

The legal right of an individual or entity to use, control, or occupy property or assets under the law.

Good Samaritan Statutes

Laws designed to provide legal protection to individuals who voluntarily provide aid or assistance to others in distress without expecting compensation.

Negligence

A legal concept where an individual fails to take reasonable care, resulting in damage or harm to another.