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1. Harold purchases land and a building by paying $35,000 cash and assuming the seller's $82,000 mortgage. In addition, Harold pays $3,000 in legal fees related to the purchase. For property tax purposes, the land is valued at $17,000 and the building at $34,000. Harold's basis in the building is:

Respuesta :

chamberlainuket

Answer:

$80,000

Explanation:

See attached file

Ver imagen chamberlainuket

Answer:

$80,000

Explanation:

cash paid                                  $35,000

mortgage loan                          $82,000

legal fees                                     $3,000

Total cost                                 $120,000

Ratio for property tax purposes

       land                                   $ 17,000

       building                             $34,000

       Total                                  $51,000

Harold's basis in the building is:

                               (120,000 / 51,000) x 34,000

                                 = $80,000

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