In 2018, the basis of a taxpayer's replacement residence is equal to the cost of the replacement residence less the gain which was deferred on the sale of the old residence. True False

Question

Mallory Hernandez

Business

13 January, 02:28

In 2018, the basis of a taxpayer's replacement residence is equal to the cost of the replacement residence less the gain which was deferred on the sale of the old residence. True False

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Answers (2)

Know the Answer?

Darion Good · Answer 1

Answer: False

Russell · Answer 2

In 2018, the basis of a taxpayer's replacement residence is equal to the cost of the replacement residence less the gain which was deferred on the sale of the old residence - True

Explanation:

Basis of acquired property in like-kind replacement = Fair market value of the new property (cost) - Deferred gain on sale of the old property + Deferred loss.

Generally, the basis of an asset is defined by how the property was acquired.

Thus, in replacement, actual cost should be considered, and it should reduce by any deferred gain on the sale of old assets. This implies that it gives the net cost of the asset replacement.