Question

ABC Company purchased business property several years ago, paying $25,000 cash and borrowing $80,000 to fund the acquisition. ABC also incurred $2,000 of freight costs for shipping the property to its business location. Over time, ABC has incurred $12,000 of repair costs for the property and made $7,000 of capital improvements. ABC has also deducted $56,000 of MACRS depreciation on the property to date. Calculate ABC's adjusted tax basis in this asset.

Answer 1

$58,000

Step-by-step explanation:

The computation of the adjusted tax basis in this asset is shown below:

= Cash paid + borrowed amount for funding the acquisition + freight cost + capital improvements - MACRS depreciation expense

= $25,000 + 80,000 + $2,000 + $7,000 - $56,000

= $58,000

All other items that are mentioned in the question is not relevant. Hence, ignored it