(a)
Taxable dividend does not reduce basis in stock. Basis in stock remains at $6,300
Non-taxable stock dividend does not alter basis in stock. Basis in stock remains at $6,300
(b)
Adjusted basis in building is:
Particulars | Amount |
Purchase | $ 240,000 |
Wing cost | $ 60,000 |
Less: depreciation | |
2016 | $ (4,800) |
2017 | $ (7,300) |
2018 | $ (8,100) |
2019 | $ (8,100) |
Adjusted basis | $ 271,700 |
Annual maintenance and painting costs are not capitalized.
(c)
Basis in land = $33,000 + 2,000 = $35,000
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