Koch traded Machine 1 for Machine 2 when the fair market value of both machines was $60,000. Koch originally purchased Machine 1 for $76,900, and Machine 1's adjusted basis was $40,950 at the time of the exchange. Machine 2's seller purchased it for $64,050 and Machine 2's adjusted basis was $55,950 at the time of the exchange. What is Koch's adjusted basis in machine 2 after the exchange?

Question

Engineering

Joe

9 November, 14:51

Koch traded Machine 1 for Machine 2 when the fair market value of both machines was $60,000. Koch originally purchased Machine 1 for $76,900, and Machine 1's adjusted basis was $40,950 at the time of the exchange. Machine 2's seller purchased it for $64,050 and Machine 2's adjusted basis was $55,950 at the time of the exchange. What is Koch's adjusted basis in machine 2 after the exchange?

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Answers (1)

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Uriel Boone · Answer 1

Koch's adjusted basis in machine 2 after the exchange is $60,000

Explanation:

given data

fair market value = $60,000

originally purchased Machine 1 = $76,900

Machine 1 adjusted basis = $40,950

Machine 2 seller purchase = $64,050

Machine 2 adjusted basis = $55,950

solution

As he exchanged machine for another at $60,000

and this exchanged in fair market

so adjusted basis = $50,000

Adjusted basis is the price of the item that affects the factors that are considered price. These factors usually include taxes, depreciation value, and other costs of acquiring and maintaining a given item. Adjusted basis is important so the right amount to sell

Adjusted basis increases when a person deducts expenses from factor taxes and operating statements

so Koch's adjusted basis in machine 2 after the exchange is $60,000