Laurie's Lawn Service, Inc., purchases a heavy-duty tri-cut lawn mower on March 17, 2014, for $5,500. Under a special election, Laurie's expenses the $5,500 cost of the lawn mower in 2014. In July, a tire on the lawn mower is repaired at a cost of $450. Maintenance costs on the lawn mower for 2014 total $175. What is Laurie's basis in the lawn mower at the end of 2014?

Question

Quizplus · Accepted Answer

Laurie's basis in the lawn mower is $0 at the end of 2014 because the entire cost of the lawn mower was expensed under a special election, reducing the basis to zero. The repair and maintenance costs do not affect the basis.