Milton purchases land and a factory building for his business for $300,000 with $100,000 being allocated to the land.
During the first year, Milton deducts cost recovery of $4,922.Milton's adjusted basis for the building at the end of the first year is $195,078 ($200,000 - $4,922).

Question

Quizplus · Accepted Answer

Milton's adjusted basis for the building at the end of the first year is calculated by subtracting the cost recovery of $4,922 from the original building cost of $200,000, resulting in an adjusted basis of $195,078.

Milton Purchases Land and a Factory Building for His Business