In January 2011,Keystone Trucking Company exchanged an old truck,which cost $74,000 and had accumulated depreciation of $38,000,for a new truck having a fair market value of $82,000.In connection with the exchange,Keystone paid $40,000 in cash.What is the tax basis of the new truck?

Question

Quizplus · Accepted Answer

The tax basis of the new truck is the old truck's adjusted basis plus the cash paid. The old truck's adjusted basis is its cost minus its accumulated depreciation, which is $74,000 - $38,000 = $36,000. The tax basis of the new truck is therefore $36,000 + $40,000 = $76,000.

In January 2011,Keystone Trucking Company Exchanged an Old Truck,which Cost