1)

Gary inherited a Maine summer cabin on 10 acres from his grandmother. His grandparents originally purchased the property for $500 in 1950 and built the cabin at a cost of $10,000 in 1965. His grandfather died in 1980 and when his grandmother recently passed away, the property was appraised at $500,000 for the land and $700,000 for the cabin. Since Gary doesnt currently live in New England, he decided that it would be best to put the property to use as a rental.

What is Garys basis in the land and in the cabin?

2) Shasta Corporation sold a piece of land to Bill for $45,000. Shasta bought the land two years ago for $30,600. What gain or loss does Shasta realize on the transaction?

3) Lassen Corporation sold a machine to a machine dealer for $30,000. Lassen bought the machine for $54,000 and has claimed $12,000 of depreciation expense on the machine.

What gain or loss does Lassen realize on the transaction?