Answer:
Their basis will be 90,000 for Mr Castanza
and 60,000 for Ned
Also Ned will recognize a capital gain for 70,000 when performing the transfer of the property. As his adjusted basis is 30,000 while the property value is 100,000
Explanation:
Mr Castanza
90,000 = 60%
Ned
100,000 - 40,000 = 60,000 = 40%
Total capital
90,000 + 60,000 = 150,000 = 100%
<u>Check for difference:</u>
90,000/150,000 x 60% = 90,000
60,000/150,000 x 40% = 60,000
Their basis will be 90,000 for Mr Castanza
and 60,000 for Ned
Also Ned will recognize a capital gain for 70,000 when performing the transfer of the property. As his adjustedbasis is 30,000 while the property value is 100,000
