Calculating Bob's Basis in Warehouse and Land

What is Bob’s basis in the warehouse and in the land?

Answer:

Bob's basis in the warehouse is $143,000 and in the land is $146,250.

Explanation:

Bob's Basis in Warehouse: To calculate Bob's basis in the warehouse, we use the purchase price of $143,000 since it is higher than the appraised fair market value of $93,000. Therefore, Bob's basis in the warehouse is $143,000.

Bob's Basis in Land: To calculate Bob's basis in the land, we use the appraised value of $146,250 since it is higher than the purchase price of $143,000. Thus, Bob's basis in the land is $146,250.

Bob's basis in the warehouse and land can be determined based on the purchase price and the appraised values of each property. In this case, Bob's basis in the warehouse is determined by the purchase price, and his basis in the land is determined by the appraised value.

What would be Bob’s basis in the warehouse and in the land if the appraised value of the warehouse was $68,000, and the appraised value of the land was $143,000?

Answer:

Bob's basis in the warehouse would still be $143,000, and in the land, it would be $146,250.

Explanation:

Bob's Basis in Warehouse: If the appraised value of the warehouse is $68,000, and the purchase price is $143,000, Bob's basis in the warehouse would remain $143,000. This is because we use the higher value between the purchase price and the appraised value to determine the basis, and in this case, $143,000 is higher.

Bob's Basis in Land: If the appraised value of the land is $143,000 and the purchase price is $146,250, Bob's basis in the land would still be $146,250. This is because we use the higher value between the purchase price and the appraised value to determine the basis, and in this case, $146,250 is higher.

Therefore, even with different appraised values, Bob's basis in the warehouse and land would remain the same as determined by the higher of the purchase price and appraised value for each property.