Jesse purchases land and an office building for his business for $200,000 with $50,000 being allocated to the land.During the first year, Jesse deducts cost recovery of $3,050.Jesse's adjusted basis for the building at the end of the first year is $146,950 ($150,000 - $3,050).

Question

Quizplus · Accepted Answer

The calculation is correct. Jesse's adjusted basis for the building at the end of the first year is $150,000 (original cost) minus $3,050 (cost recovery) which equals $146,950.

Jesse Purchases Land and an Office Building for His Business