Berly Company transferred an old asset with a $12,300 adjusted tax basis in exchange for a new asset worth $20,000.Which of the following statements is false?
A)The old asset's FMV is $20,000.
B)If the exchange is nontaxable,Berly's tax basis in the new asset is $12,300.
C)If the exchange is taxable,Berly's recognized gain is $7,700.
D)None of the statements is false.

Question

Quizplus · Accepted Answer

All the statements are true. In a nontaxable exchange, the basis of the new asset is the same as the old asset's adjusted basis. In a taxable exchange, the recognized gain is the difference between the fair market value of the new asset and the adjusted basis of the old asset.

Berly Company Transferred an Old Asset with a $12,300 Adjusted