Which of the following statements about tax basis is false?
A) The tax basis in an asset can never be negative.
B) Tax basis represents the taxpayer's unrecovered dollars invested in the asset.
C) Tax basis reflects the asset's fair market value.
D) Every asset owned by the taxpayer has a tax basis.

Question

Quizplus · Accepted Answer

Tax basis does not necessarily reflect an asset's fair market value. It represents the taxpayer's unrecovered dollars invested in the asset, which may differ from fair market value due to factors such as depreciation, capital gains or losses, and adjustments for expenses. Options A, B, and D are all true statements about tax basis.

Which of the Following Statements About Tax Basis Is False