Ted Purchases Some Forest Land in 2016 with the Intention

question 37

Multiple Choice

Ted purchases some forest land in 2016 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 2017, Ted pays a contractor $4,000 to bulldoze and level the site of the log cabin. In 2018, 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 2016 and $5,000 of property taxes in 2017 and 2018 on the land. What is Ted's basis in the land at the end of 2018?

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

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