During the current year, Tony purchased new car wash equipment for use in his service station business. Tony's costs in connection with the new equipment this year were as follows: What is Tony's basis in the car wash equipment?

Question

During the current year, Tony purchased new car wash equipment for use in his service station business. Tony's costs in connection with the new equipment this year were as follows:  What is Tony's basis in the car wash equipment?

Quizplus · Accepted Answer

Tony's basis in the car wash equipment is the total cost of acquiring and preparing the equipment for use in the business. This includes not only the purchase price of $46,000, but also the sales tax of $2,300, delivery fees of $1,500, and installation and testing costs of $2,800. Therefore, Tony's basis in the car wash equipment is $52,600 ($46,000 + $2,300 + $1,500 + $2,800).

During the Current Year, Tony Purchased New Car Wash Equipment