Allison buys equipment and pays cash of $50,000,signs a note of $10,000 and assumes a liability on the property for $3,000.In addition,Allison pays an installation cost of $500 and a delivery cost of $800.Allison's basis in the asset is

Question

Quizplus · Accepted Answer

Allison's basis in the asset includes all costs incurred to acquire the asset and prepare it for use. This includes the cash paid ($50,000), the note signed ($10,000), the assumed liability ($3,000), the installation cost ($500), and the delivery cost ($800). Adding these amounts gives a total basis of $64,300.

Allison Buys Equipment and Pays Cash of $50,000,signs a Note