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:

M/M/1 Queue

A model describing a queueing scenario with a single server, where arrivals are determined by a Poisson process, and service times have an exponential distribution.

Units in the System

The total number of items or entities currently being processed or within a particular process or system at any given time.

Poisson Distribution

A statistical distribution describing the probability of a given number of events happening in a fixed interval of time or space, assuming events happen independently at a constant rate.

Exponential Distribution

A probability distribution that describes the time between events in a Poisson process, showing how a process is spread out over time.