What is the definition of "substantially appreciated inventory"?
A)inventory with a FMV greater than its basis
B)inventory and unrealized receivables with a FMV greater than their basis
C)inventory with a FMV greater than 120% of its basis
D)inventory and unrealized receivables with a FMV greater than 120% of their basis

Question

Quizplus · Accepted Answer

According to the IRS, substantially appreciated inventory includes inventory and unrealized receivables with a fair market value (FMV) greater than 120% of their adjusted basis. Option A is not specific to unrealized receivables, option B does not mention the 120% threshold, and option C is not specific to unrealized receivables. Therefore, option D is the best choice.

What Is the Definition of "Substantially Appreciated Inventory