Carl Purchased a Building Costing $120,000 in 1998 for Use

question 41

Essay

Carl purchased a building costing $120,000 in 1998 for use in his landscape business.In 2008,he built an addition to the building at a cost of $30,000.In 2011,a tornado damaged the building.The cost of repairing the building was $22,000 and Carl's insurance company paid $16,000 of the cost of the repairs.Depreciation deducted on the building for 1998 through 2013 totaled $18,000.What is Carl's adjusted basis in the building at the end of 2013? Explain.

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Definitions:

Social Interest

The welfare or well-being of the general public and society at large, considering the collective needs rather than individual interests.

No Personal Financial Responsibility

A situation where individuals do not bear direct financial consequences for their actions, often due to insurance, subsidies, or other protective measures.

Corporations

Legal entities that are separate from their owners, providing limited liability protection, and have the ability to raise capital through selling shares.

Invisible Hand

A metaphor introduced by Adam Smith to describe the self-regulating nature of the market whereby individuals working for their own interest inadvertently benefit society.