Thirty years ago,Prescott Inc.realized a $16,200 gain on the exchange of an old building for a new building.Prescott included the gain in book income,but the exchange was nontaxable.This year,Prescott sold the new building for $250,000.At date of sale,the new building's book basis and tax basis had both been depreciated to zero.Which of the following statements is true?

Question

Quizplus · Accepted Answer

The sale of the new building had no effect on Prescott's deferred tax accounts because both the book basis and tax basis were zero, meaning there was no difference to create a deferred tax asset or liability.

Thirty Years Ago,Prescott Inc