Mary traded furniture used in her business to a furniture dealer for some new furniture. Mary originally purchased the furniture for $45,000 and it had an adjusted basis of $20,000 at the time of the exchange. The new furniture had a fair market value of $40,000. Mary also gave $4,000 to the dealer in the transaction. What is Mary's adjusted basis in the new furniture after the exchange?

Question

Quizplus · Accepted Answer

Mary's adjusted basis in the new furniture is the adjusted basis of the old furniture ($20,000) plus the additional cash paid ($4,000), totaling $24,000.

Mary Traded Furniture Used in Her Business to a Furniture