Carlton Purchases Land for $550,000

Multiple Choice

Carlton purchases land for $550,000. He incurs legal fees of $10,000 and broker's commission of $28,000 associated with the purchase. He subsequently incurs additional legal fees of $25,000 in having the land rezoned from agricultural to residential. He subdivides the land and installs streets and sewers at a cost of $800,000. What is Carlton's basis for the land and the improvements?

A) $1,350,000
B) $1,378,000
C) $1,385,000
D) $1,413,000
E) None of the above