Cardinal Company incurs $800,000 during the year to construct a facility that will be used exclusively for the care of its employees' preschool age children during normal working hours.Assuming that Cardinal claims the credit for employer-provided child care this year, its basis in the newly constructed facility is $640,000.

Question

Quizplus · Accepted Answer

The basis of the newly constructed facility would be reduced by the amount of the credit claimed for employer-provided child care facilities, not by the total cost incurred. The statement does not provide enough information to accurately calculate the adjusted basis without knowing the specific credit amount Cardinal Company claims.

Cardinal Company Incurs $800,000 During the Year to Construct a Facility