Question

Damien paid $41,000 for a new car. A few weeks later, he received a $2,000 cash rebate from the manufacturer. Damien later claimed and received a $3,750 federal tax credit for purchasing and owning the vehicle. Damien's basis in the car is:

Answer 1

Answer:

$35,300

Explanation:

Cash paid = $41,000

Cash rebate received = $2,000

Federal tax received = $3,700

Damian's basis of car = Cash paid - (Cash rebate received + Federal tax received)

Damian's basis of car = $41000 - ($2000 + $3700)

Damian's basis of car = $41000 - $5,700

Damian's basis of car = $35,300