At the beginning of 2013, Pitman Co. purchased an asset for $900,000 with an estimated useful life of 5 years and an estimated salvage value of $75,000. For financial reporting purposes the asset is being depreciated using the straight-line method; for tax purposes the double-declining-balance method is being used. Pitman Co.s tax rate is 40% for 2013 and all future years.

1. At the end of 2013, what is the book basis and the tax basis of the asset?

Book basis Tax basis

a. $660,000 $465,000

b. $735,000 $465,000

c. $735,000 $540,000

d. $660,000 $540,000