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 1

Hawkeye sold farming equipment for $55,000.It bought the equipment four years ago for $75,000, and it has since claimed a total of $42,000 in depreciation deductions against the asset.Explain how to calculate Hawkeye's adjusted basis in the farming equipment.