E7-1 McCoy's Fish House purchases a tract of land and an existing building for $1.000.000. The company plans to remove the old building and construct a new restaurant on the site. In addition to the purchase price. McCoy pays closing costs, including title insurance of $3.000. The company also pays $14.000 in property taxes, which includes $9.000 of back taxes (unpaid taxes from previous years) paid by McCoy on behalf of the seller and $3,000 due for the current fiscal year after the purchase date. Shortly after closing the company pays a contractor $50,000 to tear down the old building and remove it from the site. McCoy is able to sell salvaged materials from the old building for $5.000 and pays an additional $11.000 to level the land