Monterey Developers Purchases 10 Acres of Land for $15,000 on January

question 36

Multiple Choice

Monterey Developers purchases 10 acres of land for $15,000 on January 14, 2014. They also pay $2,000 in legal and other fees related to the purchase. Monterey spends $3,000 for legal fees, permit licenses, and city franchise fees to subdivide the land into 10 one-acre plots. Sewer and utility line easements cost an additional $5,000. Interest paid on the loan that financed the purchase is $1,200 for 2014. Monterey also pays $800 in property taxes in 2014. What is Monterey's adjusted basis in the land at the end of 2014?

• A) $17,000
• B) $25,000
• C) $25,800
• D) $26,200
• E) $27,000

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