Question

John and Fred owned, as joint tenants with right of survivorship, business property that they purchased for $40,000. John furnished one fourth of the purchase price and Fred furnished three fourths of the purchase price. Depreciation deductions allowed before Fred's death were $8,000. Under local law, each had a one half interest in the income from the property. At the time of Fred's death, the fair market value of the property was $80,000, three fourths of which is includable in Fred's estate. What is John's basis in the property at the date of Fred's death

Answer 1

$66,000

Step-by-step explanation:

Given the following :

Property pur has price = $40000

John's portion of purchase price = 1/4 = (1/4 * 40000) = $10,000

Fred's portion = 3/4 = 0.75 * 40,000 = $30,000

Depreciation allowed before Fred's death = $8000

Each beared half :

That is ; (0.5 * $8000) = $4000 each

Fair market value of property at the time of Fred's death = $80,000

Portion owned by Fred at the time = 3/4

0.75 * $80,000 = $60,000

At this time, John has taken up full ownership :

Basis = $6000 + $60,000 = $66,000