Carlton purchases land for $550,000.He incurs legal fees of $10,000 and broker's commission of $28,000 associated with the purchase.He subsequently incurs additional legal fees of $25,000 in having the land rezoned from agricultural to residential.He subdivides the land and installs streets and sewers at a cost of $800,000.What is Carlton's basis for the land and the improvements?

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Carlton's basis for the land and improvements includes the purchase price of the land ($550,000), legal fees ($10,000), broker's commission ($28,000), additional legal fees for rezoning ($25,000), and the cost of improvements such as streets and sewers ($800,000). Adding these amounts gives a total basis of $1,413,000.

Carlton Purchases Land for $550,000