EA Part 2 question - how long to keep receipts on assets bot

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  • AZ-Tax
    Senior Member
    • Feb 2008
    • 2604

    #1

    EA Part 2 question - how long to keep receipts on assets bot

    Marco Richards, an accountant, purchased office furniture in 2005. In 2008 he switched units in the same professional building with Greg Stevenson, another tenant, and the two decided to swap office furniture rather than bother with moving all of it. How long must Richards keep the records for the furniture that is no longer his?

    A. He was required to provide it to Stevenson when the exchange took place.
    B. He must keep it until the end of the recovery period for the old furniture.
    C. He must keep it until the end of the recovery period for the new furniture.
    D. He must keep it until the year in which he disposes of the new furniture in a taxable disposition becomes a closed year.

    The answer is D

    Explanation:
    A closed year is the year the period of limitations expires. A taxpayer who receives property in a non-taxable exchange must keep the records on the old property, as well as the new property, until the period of limitations expires for the year in which he disposes of the new property in a taxable disposition.

    How long does the Marco need to retain the furniture purchase receipts if he bot the furniture and held on to it? Same answer, D?
  • ChEAr$
    Senior Member
    • Dec 2005
    • 3872

    #2
    Congratulations.

    Just a quick note to say I'm pleased that you are taking the next step, the EA exam.

    Studying for the exam brings you closer to providing the very best sevice you can possibly provide to your clients.
    ChEAr$,
    Harlan Lunsford, EA n LA

    Comment

    • Davc
      Senior Member
      • Dec 2006
      • 1088

      #3
      Originally posted by AZ-Tax
      Marco Richards, an accountant, purchased office furniture in 2005. In 2008 he switched units in the same professional building with Greg Stevenson, another tenant, and the two decided to swap office furniture rather than bother with moving all of it. How long must Richards keep the records for the furniture that is no longer his?

      A. He was required to provide it to Stevenson when the exchange took place.
      B. He must keep it until the end of the recovery period for the old furniture.
      C. He must keep it until the end of the recovery period for the new furniture.
      D. He must keep it until the year in which he disposes of the new furniture in a taxable disposition becomes a closed year.

      The answer is D

      Explanation:
      A closed year is the year the period of limitations expires. A taxpayer who receives property in a non-taxable exchange must keep the records on the old property, as well as the new property, until the period of limitations expires for the year in which he disposes of the new property in a taxable disposition.

      How long does the Marco need to retain the furniture purchase receipts if he bot the furniture and held on to it? Same answer, D?
      Yep........

      Comment

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