Juanita Sharp purchased a large parcel of property for $120,000. A short time after purchasing the property, Sharp submitted plans for the division of the parcel into six lots and the construction of three single-family residences on three of the lots. The city permits required that the property be divided into six lots and that street improvements and water and sewer access be provided.
Sharp spent $22,000 for the street, water, and sewer improvements. As a result of the improvements, the value of each of the three vacant lots increased by $1,000, based on an appraisal completed subsequent to the completion of the improvements. The costs of constructing the three single-family residences totaled $200,000.

a. List as many possible tax research issues as you can to determine how the original purchase price of $120,000, the $22,000 cost of the improvements, and the $200,000 cost of the construction of the homes should be allocated to the basis of each of the lots for purposes of determining gain or loss on the sale of the lots.

b. After completing your list of tax research issues, list the keywords you might use to construct a computer tax research query.