On October 7, 2012, Grace Gems purchased a going business for the lump-sum price of $200,000. fte fair market values of the assets Grace purchased were as follows: What is Grace's basis in the building?
A) $90,000
B) $95,000
C) $100,000
D) $102,500
E) None of the above

Question

On October 7, 2012, Grace Gems purchased a going business for the lump-sum price of $200,000. fte fair market values of the assets Grace purchased were as follows:  What is Grace's basis in the building?
A) $90,000 
B) $95,000 
C) $100,000 
D) $102,500 
E) None of the above

Quizplus · Accepted Answer

the purchaser of a business for a lump-sum price must divide the basis among the assets acquired by allocating to each asset an amount of the purchase price proportionate to, but not in excess, of its fair market value, which is $90,000. the excess of the purchase price over the fair market value of the assets is goodwill.

On October 7, 2012, Grace Gems Purchased a Going Business