Laurie's Lawn Service,Inc.,purchases a heavy-duty tri-cut lawn mower on March 17,2016,for $5,500.Under a special election,Laurie's expenses the $5,500 cost of the lawn mower in 2016.In July,a tire on the lawn mower is repaired at a cost of $450.Maintenance costs on the lawn mower for 2016 total $175.What is Laurie's basis in the lawn mower at the end of 2016?

Question

Quizplus · Accepted Answer

Laurie's basis in the lawn mower at the end of 2016 is $0 because the entire cost of the lawn mower was expensed in 2016 under the special election, reducing the basis to zero. Maintenance and repair costs do not affect the basis.