Question

1. Harold purchases land and a building by paying $35,000 cash and assuming the seller's $82,000 mortgage. In addition, Harold pays $3,000 in legal fees related to the purchase. For property tax purposes, the land is valued at $17,000 and the building at $34,000. Harold's basis in the building is:

Answer 1

$80,000

Step-by-step explanation:

cash paid $35,000

mortgage loan $82,000

legal fees $3,000

Total cost $120,000

Ratio for property tax purposes

land $ 17,000

building $34,000

Total $51,000

Harold's basis in the building is:

(120,000 / 51,000) x 34,000

= $80,000

Answer 2

$80,000

Step-by-step explanation:

See attached file