Property Is Acquired in a Qualifying Like-Kind Exchange

question 64

Multiple Choice

Property is acquired in a qualifying like-kind exchange. The acquired property is sold three months after it is acquired. Which of the following is correct?

• A) Since the holding period of the property given up in the exchange "tacks" to the holding period of the acquired property, the holding period of the acquired property could be long-term.
• B) The holding period of the acquired property is short-term.
• C) The holding period of property acquired in a like-kind exchange is always long-term.
• D) When property acquired in a like-kind exchange is disposed of, the holding period is not relevant.
• E) None of the above.

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Definitions:

Period Costs

Expenses that are not directly tied to production and are accounted for in the period in which they are incurred, such as selling and administrative expenses.

September

The month that appears as the ninth in the sequence of months in the Gregorian calendar.

Fixed Manufacturing Cost

A type of overhead cost that does not change with the level of production, such as rent, salaries, and insurance.

Units Produced

Units produced refers to the total number of completed units of a product that a company has manufactured within a specific period.