McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

Exercise 7

Wanting to finalize a sale before year-end, on December 29, WR Outfitters sold to Bob a warehouse and the land for $125,000.The appraised fair market value of the warehouse was $75,000, and the appraised value of the land was $100,000.What is Bob's basis in the warehouse and in the land? What would be Bob's basis in the warehouse and in the land if the appraised value of the warehouse is $50,000, and the appraised value of the land is $125,000? Which appraisal would Bob likely prefer?