Explore BrainMass

Computing book and tax basis in real estate

Need help answering questions (a) and (b)

This year, Charlton acquired commercial real estate ($1 million FMV and $771,000 tax basis) as part of its acquisition of HSK. What is Charlton?s book basis and tax basis in the real estate assuming that the acquisition:
(a) Was a taxable asset acquisition?
(b) Was a type C reorganization?

Solution Preview

(a)If the acquisition was a taxable asset acquisition, then we should use tax basis in the real estate, i.e., the tax basis is $771,000
<br>(b) If the acquisition was a type C reorganization, then the FMV should be used, ...