Koch Traded Machine 1 for Machine 2 When the Fair Market

question 92

Multiple Choice

Koch traded machine 1 for machine 2 when the fair market value of both machines was $50,000. 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 the choices are correct.

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