Final answer:
Kole's warehouse has a net equity of $160,000, which is calculated by subtracting the mortgage principal balance of $80,000 from the adjusted basis of the warehouse, which is $240,000.
Step-by-step explanation:
The net equity in a property can be calculated by subtracting the amount owed on any mortgages from the adjusted basis of the property. In the case of Kole's warehouse, which has an adjusted basis of $240,000 and a mortgage with a $80,000 principal balance, the net equity can be determined as follows:
- Adjusted Basis of the warehouse: $240,000
- Principal balance of the mortgage: $80,000
- Net Equity = Adjusted Basis - Mortgage Principal Balance
- Net Equity = $240,000 - $80,000
- Net Equity = $160,000
Therefore, the net equity in Kole's warehouse is $160,000.