L operates a proprietorship.During the year, she transferred the following assets from personal to business use: $$\begin{array}{l}
\text { Asset}&\text { Cost}&\text { Market Value }\
\text { Car } & \$ 18,000 & \$ 12,000 \
\text { Land } & \$ 40,000 & \$ 50,000
\end{array}$$ The proprietorship's combined or total basis in these assets is
A)$52,000
B)$58,000
C)$62,000
D)$68,000

Question

Quizplus · Accepted Answer

When transferring personal assets to business use, the basis for depreciation is the lower of the cost or market value at the time of transfer. For the car, the basis is $12,000 (market value), and for the land, the basis is $40,000 (cost). Therefore, the total basis is $12,000 + $40,000 = $52,000.

L Operates a Proprietorship The Proprietorship's Combined or Total Basis in These Assets Is