In December 2006, Mr. Smith purchased a manufacturing plant for $85,400. The cost was allocated as follows:
Land (20%) - $17,080. Building (80%) - $68,320
The following items relating To The property occurred before the property was placed in service on January 1, 2007:
Building remodeling expenses $10,000
Storm damage (caSualty loSS) to the building $8,000
EasEmEnt grantEd for right-of—way $2,500
LegaL fees paid for perfecting the titLe $3,600
What is the adjusted basis of the building and land on January 1. 2007?
Correct Answer:
Building $70,800, Land $17,700
Explanation:
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