Dennis purchased a machine for use in his business. Mr. Dennis' costs in connection with this purchase were as follows: $$\begin{array} { | l | r | }
\hline \text { Note to seller } & \$ 33,000 \
\hline \text { Cash paid to seller } & 5,000 \
\hline \text { State sales tax } & 2,400 \
\hline \text { Freight to place of business } & 1,500 \
\hline \text { Wages paid to workers to install machine } & 4,200 \
\hline
\end{array}$$ What is the amount of Mr. Dennis' basis in the machine?

Question

Dennis purchased a machine for use in his business. Mr. Dennis' costs in connection with this purchase were as follows: $$\begin{array} { | l | r | } 
\hline \text { Note to seller } & \$ 33,000 \
\hline \text { Cash paid to seller } & 5,000 \
\hline \text { State sales tax } & 2,400 \
\hline \text { Freight to place of business } & 1,500 \
\hline \text { Wages paid to workers to install machine } & 4,200 \
\hline
\end{array}$$ What is the amount of Mr. Dennis' basis in the machine?

Quizplus · Accepted Answer

The basis of the machine includes all costs necessary to acquire and prepare it for use. This includes the note to the seller ($33,000), cash paid to the seller ($5,000), state sales tax ($2,400), freight ($1,500), and installation wages ($4,200), totaling $46,100.

Dennis Purchased a Machine for Use in His Business What Is the Amount of Mr