Which of the following events causes the purchaser of an option to add its cost to the basis of the property to which the option relates?
A)The option is exercised.
B)The option is sold.
C)The option lapses.
D)The option is rescinded.
E)None of these.

Question

Quizplus · Accepted Answer

When an option is exercised, the cost of the option is added to the basis of the property to which the option relates. This is because the cost of the option becomes part of the total cost of acquiring the property. The other options (selling, lapsing, or rescinding the option) do not result in the purchaser adding the cost of the option to the property's basis.

Which of the Following Events Causes the Purchaser of an Option