On June 10,2015,Ebon,Inc.acquired an office building as a result of a like-kind exchange.Ebon had given up a factory building that it had owned for 26 months as part of the like-kind exchange.Which of the statements below is correct?
A)The holding period of the factory building includes the holding period of the office building.
B)The holding period of the office building starts on June 11,2015.
C)The holding period of the office building starts on June 10,2015.
D)The holding period of the office building includes the holding period of the factory building.
E)None of the above.

Question

Quizplus · Accepted Answer

According to the tax regulations, the holding period of the acquired property (office building) includes the holding period of the relinquished property (factory building) in a like-kind exchange. Therefore, the holding period of the office building starts on the date Ebon acquired the factory building, which is the date Ebon first held the factory building. Hence, the correct statement is that the holding period of the office building includes the holding period of the factory building. Choice D is the only option that correctly reflects this rule.