Question

On April 5, 2020, Ryan received land and a building from Thom as a gift. Thom's adjusted basis and the fair market value at the date of the gift are as follows:

Asset	Adjusted Basis			FMV
Land	$40,000			$35,000
Building	110,000			90,000

Thom paid gift tax of $8,000 on the transfer.

b. Assume instead that the fair market value of the land was $53,000 and that of the building was $120,000. Determine Ryan's adjusted basis for the land and building.

Ryan's total basis for the assets received from Thom is $________________

Ryan's adjusted basis for the land is $______________

Ryan's adjusted basis for the building is $_____________

Answer 1

b. Assume instead that the fair market value of the land was $53,000 and that of the building was $120,000. Determine Ryan's adjusted basis for the land and building.

Ryan's total basis for the assets received from Thom  = Adjusted basis of Land + Adjusted basis of Building

Ryan's total basis for the assets received from Thom = $40000+$110000 = $150000

**

Ryan's adjusted basis for the land = ( FMV of land / total FMV ) * Ryan's total basis for the assets

total FMV = 53000 + 120000 = 173000

Ryan's adjusted basis for the land = (53000/173000)*150000 = $45954

**

Ryan's adjusted basis for the Building = ( FMV of Building / total FMV ) * Ryan's total basis for the assets

Ryan's adjusted basis for the building = (120000/173000)*150000 = $104046