Which of the following is not true regarding an asset's adjusted basis?
A)Tax-adjusted basis is usually greater than book-adjusted basis.
B)Tax-adjusted basis is usually less than book-adjusted basis.
C)Adjusted basis is cost basis less cost recovery deductions.
D)Tax-adjusted basis may change over time.

Question

Quizplus · Accepted Answer

The adjusted basis of an asset is its original cost basis adjusted for various factors such as depreciation, improvements, and damages. Tax-adjusted basis is often less than the book-adjusted basis because tax regulations often allow for more aggressive depreciation and deductions, reducing the tax-adjusted basis more quickly than the book-adjusted basis, which is calculated using different rules. Therefore, the statement that tax-adjusted basis is usually greater than book-adjusted basis is not true.

Which of the Following Is Not True Regarding an Asset's