Nanci purchases all of the assets of michael's security service for $200,000. the assets are as follows: asset adjusted basis fair market value inventory $25,000 $50,000 equipment 60,000 40,000 supplies 20,000 20,000 building 80,000 95,000 land 10,000 20,000 $195,000 $225,000 what is nanci's basis in the equipment? a.$40,000 b.$17,776 c.$35,556 d.$61,538 e.$60,000

option (c) $35,556

Explanation:

Data provided in the question:

Assets = $200,000

Asset            Adjusted Basis        FMV

Inventory      $25,000                $50,000

Equipment   $60,000                $40,000

Supplies       $20,000                $20,000

Building        $80,000                $95,000

Land             $10,000                 $20,000

=========================================

Total            $195,000               $225,000

=========================================

Now,

FMV is greater than Basis

thus,

Percentage FMV on Equipment =  

or

Percentage FMV on Equipment =

= 17.77%

Therefore,

= Percentage FMV × Assets

or

= 17.77% × $200,000

= $35,555.56  ≈ $35,556

Hence,

The correct answer is option (c) $35,556

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