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28 Sep 2019
An investor buys a property for $1 million with 40% of the purchase price attributable to the land and the balance to a single structure. The purchaser incurs transaction costs equals to 5 percent of the purchase price (these must be capitalized). The investor then spends $400,000 to the rehabiliate the structure (she is entitled to no tax credits). Subsequently she claims $110,000 of the cost recovery allowances. She then sells the land but retains tittle to the building and a long-term leasehold interest in the land. The sale price is $600,000, including transaction costs, which equaled 10 percent of the selling price. What is the investor's adjusted tax basis in the remaining asset after accounting for all these transactions?
An investor buys a property for $1 million with 40% of the purchase price attributable to the land and the balance to a single structure. The purchaser incurs transaction costs equals to 5 percent of the purchase price (these must be capitalized). The investor then spends $400,000 to the rehabiliate the structure (she is entitled to no tax credits). Subsequently she claims $110,000 of the cost recovery allowances. She then sells the land but retains tittle to the building and a long-term leasehold interest in the land. The sale price is $600,000, including transaction costs, which equaled 10 percent of the selling price. What is the investor's adjusted tax basis in the remaining asset after accounting for all these transactions?
Patrina SchowalterLv2
28 Sep 2019