Grant exchanges an old pizza oven from his business for a new oven. In addition to the old oven, which had a basis of $10,000, Grant pays $10,000. The new oven is valued at $22,000. What is Grant's basis in the new oven?
A)$12,000
B)$16,000
C)$20,000
D)$22,000
E)$32,000

Question

Quizplus · Accepted Answer

Grant's basis in the new oven is equal to the fair market value of the old oven ($10,000) plus the amount of cash paid ($10,000). Therefore, Grant's basis in the new oven is $20,000.

Grant Exchanges an Old Pizza Oven from His Business for a New