Which of the following statement about the basis is true 1-bonus special depreciation decrease basis 2-basis is not impacted by casualty loss 3- basis is not impacted by the section 179 deduction 4-depreciation can decrease bases below zero

Accounting Nov 27, 2020

Which of the following statement about the basis is true

1-bonus special depreciation decrease basis

2-basis is not impacted by casualty loss

3- basis is not impacted by the section 179 deduction

4-depreciation can decrease bases below zero

Expert Solution

The original basis in the asset is increased or decreased by certain events. If deduction for depreciation is taken it reduce the basis.

Depreciation can decrease the basis till it is zero. It cannot make the basis negative. Hence option D is false. Basis is also impacted by casualty losses and section 179 deduction. Hence option B and C are false.

Hence, The correct option is A

Bonus special depreciation decrease basis

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