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Sebastian purchases two pieces of equipment for $199,000. Appraisals of the equipment indicate that the fair market value of the first piece of equipment is $139,300 and that of the second piece of equipment is $218,900. What is Sebastian's basis in these two assets?

Respuesta :

Answer:

$77,389 and  $121,611

Explanation:

The computation of the Sebastian's basis in these two assets is shown below:

= Market value of the first piece of equipment ÷ Total market value of two pieces of equipment × purchase value of two pieces of equipment

= ($139,300 ÷ $358,200) × $199,000

= $77,389

= Market value of the second piece of equipment ÷ Total market value of two pieces of equipment × purchase value of two pieces of equipment

= ($218,900 ÷ $358,200) × $199,000

= $121,611

The Total market value of two pieces of equipment

= $139,300 + $218,900

= $358,200

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