An amortizable asset's taxable basis is calculated as its:
A) Cost
B) Net book value on the balance sheet
C) Market value at the time of disposal
D) Cost less accumulated tax amortization

Question

Quizplus · Accepted Answer

A taxable basis for an amortizable asset is its cost less accumulated tax amortization. Option A is incorrect because cost alone does not consider the impact of tax deductions over time. Option B is incorrect because net book value includes accumulated depreciation, not accumulated tax amortization. Option C is incorrect because market value is not relevant for tax purposes when disposing of an asset, rather the taxable basis is what is used to determine any gains or losses on the sale.

An Amortizable Asset's Taxable Basis Is Calculated as Its