In determining the basis of like-kind property received, postponed losses are:
A)Added to the basis of the old property.
B)Subtracted from the basis of the old property.
C)Added to the fair market value of the like-kind property received.
D)Subtracted from the fair market value of the like-kind property received.

Question

Quizplus · Accepted Answer

Postponed losses are added to the fair market value of the like-kind property received to determine the basis of the new property. This adjustment ensures that the loss is not lost but is instead deferred until the new property is disposed of.

In Determining the Basis of Like-Kind Property Received, Postponed Losses