Determine the Adjusted Basis of the Following Assets

question 96

Essay

Determine the adjusted basis of the following assets.
a.Dennis buys land by paying $45,000 in cash and assuming a loan for $45,000. He incurs legal fees and commissions of $5,000. He pays $3,000 to have tree seedlings planted on the property. A flood causes $6,000 of damage to the property. Dennis does not carry flood insurance, so he deducts the total loss on his tax return. His property tax liability for this year is $750 and his interest on the loan is $1,850.
b.Tyler buys 100 shares of Oliver Corporation stock at $150 per share plus commissions of $300. At the end of the year, Oliver pays a $10 per share cash dividend and informs shareholders that $6 per share is taxable as a dividend and $4 is a nontaxable dividend.
c.Taylor Corporation acquires an asset for $8,000 in its first year of operation. Since the company suffers a loss during this first year of operation, the bookkeeper decides to deduct only half of the depreciation that was allowable on this asset and claims a depreciation deduction of $800, instead of $1,600.

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Definitions:

James-Lange Theory

A theory of emotion proposing that emotions occur as a result of physiological reactions to events, suggesting that bodily responses precede emotions and help in identifying them.

Physiological Changes

Alterations in the body's normal biological functions, which can be responses to various factors including stress, environmental changes, or health conditions.

Happiness

A state of well-being and contentment characterized by positive or pleasant emotions ranging from contentment to intense joy.

Stimulus

(STIM-yu-lus) Any event or object in the environment to which an organism responds; plural is stimuli.