4.5.1 Basic Quiz -- Inventory and Income Tax Deductions

Any item of personal property that a person plans to sell is classified as "inventory."

True False

Gifts of inventory are treated like gifts of other types of appreciated property for tax deduction purposes.

True False

A donor of inventory generally may deduct only his or her cost basis in the donated inventory.

True False

A donor of tangible personal property for unrelated use may deduct only his or her cost basis in the donated tangible personal property.

True False

If a charity employs donated inventory in a "related use" to its charitable purpose, the donor may deduct the fair market value of the inventory.

True False

A gift of inventory that is scientific equipment given to educational institutions or research organizations may receive more favorable treatment than other inventory gifts.

True False

Inventory that consists of computers given to schools receives more favorable treatment than gifts of other inventory items.

True False

Gifted items of inventory that are employed in a "related use" and used to care for infants are deductible at the lesser of twice cost basis or one half of the appreciation plus basis.

True False

A coin collection sales agency which donates a coin collection (inventory) that will be employed in a "related use" may deduct the fair market value of the coin collection.

True False

Only business entities have property classified as inventory.