Laurie's Lawn Service,Inc.,purchases a heavy-duty tri-cut lawn mower on March 17,2013,for $5,500.Under a special election,Laurie's expenses the $5,500 cost of the lawn mower in 2013.In July,a tire on the lawn mower is repaired at a cost of $450.Maintenance costs on the lawn mower for 2013 total $175.What is Laurie's basis in the lawn mower at the end of 2013?

Question

Quizplus · Accepted Answer

Laurie's basis in the lawn mower is $0 at the end of 2013 because the entire cost of the lawn mower was expensed in 2013 under the special election, reducing the basis to zero. Maintenance and repair costs do not affect the basis.