The general mechanism used to defer gains and losses from a transaction includes certain adjustments to the fair market value of the replacement property. These adjustments include
I.adding boot received.
II.subtracting deferred gains.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question

The general mechanism used to defer gains and losses from a transaction includes certain adjustments to the fair market value of the replacement property. These adjustments include
I.adding boot received.
II.subtracting deferred gains.
​
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Quizplus · Accepted Answer

Deferred gains are subtracted from the fair market value of the replacement property to determine the adjusted basis, while boot received is not added.

The General Mechanism Used to Defer Gains and Losses from a Transaction