Muro Inc. exchanged an old inventory item for a new asset. If the new asset is also an inventory item, the exchange is nontaxable.

Question

Quizplus · Accepted Answer

The exchange of inventory items, even for another inventory item, is considered a taxable event for tax purposes because inventory is held primarily for sale to customers in the ordinary course of business, and gains or losses from such exchanges are recognized.

Muro Inc Exchanged an Old Inventory Item for a New Asset