(CO F) XYZ Corporation purchased land and an office building for$2,800,000. The real estate contract did not specify the amounts toallocate to the land and to the building. An appraisal determinedthe fair market value (FMV) of the land to be $1.000,000 and thefair market value (FMV) of the building to be $3.000,000,a) Please calculate the basis of the land. Show your work.b) Please calculate the basis of the building. Show your work.

Purchase Price of Land and office= $2800000 Fair Market Value of Land = $1000000 Fair Market value…

YCO F) XYZ Corporation purchased land and an office building for $2,800,000. The real estate contract did not specify the amounts to allocate to the land and to the building. An appraisal delermined the fair market value (FMV) of the land to be $1.000,000 and the fair market value (FMV) of the building to be $3,000,000, a) Please calculate the basis of the land. Show your work b) Please calculate the basis of the building Show your work

YCO F) XYZ Corporation purchased land and an office building for $2,800,000. The real estate contract did not specify the amounts to allocate to the land and to the building. An appraisal delermined the fair market value (FMV) of the land to be $1.000,000 and the fair market value (FMV) of the building to be $3,000,000, a) Please calculate the basis of the land. Show your work b) Please calculate the basis of the building Show your work

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

(CO F) XYZ Corporation purchased land and an office building for
$2,800,000. The real estate contract did not specify the amounts to
allocate to the land and to the building. An appraisal determined
the fair market value (FMV) of the land to be $1.000,000 and the
fair market value (FMV) of the building to be $3.000,000,
a) Please calculate the basis of the land. Show your work.
b) Please calculate the basis of the building. Show your work.

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