Question

Dan bought a hotel for $2,600,000 in january 2011. in may 2015, he died and left the hotel to ed. while dan owned the hotel, he deducted $289,000 of cost recovery. the fair market value in may 2015 was $2,800,000. the fair market value six months later was $2,850,000.
a. what is the basis of the property to ed?

Answer 1

Answer:

$2,800,000

Explanation:

Given that

Purchased a hotel for $2,600,000

The Deducted amount is $289,000

Fair market value in may 2015 is $2,800,000

Six months later, its value is $2,850,000

Based on the above information,

The computation of the basis of the property to ed is shown below:

It should be equivalent to the fair market value i.e. $2,800,000 and hence, the same is to be considered

All other values should be ignored