Cardinal Company incurs $500,000 during the year to construct a facility that will be used exclusively for the care of its employees' pre-school age children during normal working hours.Assuming Cardinal claims the credit for employer-provided child care this year,its basis in the newly constructed facility is $375,000.

Question

Quizplus · Accepted Answer

The basis of the facility is reduced by the amount of the credit claimed, which is 25% of the $500,000 cost, resulting in a $125,000 credit and a $375,000 basis.

Cardinal Company Incurs $500,000 During the Year to Construct a Facility