Ted Purchases Some Forest Land in 2014 with the Intention

question 84

Multiple Choice

Ted purchases some forest land in 2014 with the intention of building a log cabin to use as a vacation home.To obtain the land,Ted pays $10,000 cash,assumes the seller's $19,000 mortgage on the land and pays $3,000 in commissions and legal fees related to the purchase.In 2015,Ted pays a contractor $4,000 to bulldoze and level the site of the log cabin.In 2016,Ted has a well dug and water and sewer lines laid in the ground at a cost of $6,000.Ted paid $2,000 of property taxes in 2014 and $5,000 of property taxes in 2015 and 2016 on the land.What is Ted's basis in the land at the end of 2016?

• A)$54,000
• B)$42,000
• C)$38,000
• D)$36,000
• E)$32,000

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Definitions:

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