Mona purchased a business from Judah for $1,000,000. Judah's records and an appraiser provided her with the following information regarding the assets purchased: $\begin{array}{lrr}&\text { Adjusted Basis } & \text { FMV }\
\text { Land } & \$ 195,000 & \$ 270,000 \
\text { Building } & 310,000 & 450,000 \
\text { Equipment } & 95,000 & 180,000
\end{array}$ What is Mona's adjusted basis for the land, building, and equipment?

Question

Quizplus · Accepted Answer

When assets are purchased, the buyer's basis in the assets is generally the cost to acquire them. In this case, Mona purchased the business for $1,000,000, and the fair market values (FMV) of the assets are provided. Since the purchase price would typically be allocated based on the FMV of the assets acquired, Mona's adjusted basis for the land, building, and equipment would be their respective FMVs: land $270,000, building $450,000, equipment $180,000.

Mona Purchased a Business from Judah for $1,000,000 What Is Mona's Adjusted Basis for the Land, Building, and and an Appraiser