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John inherited a summer home in Burlington, Vermont. His dad had the home built in 1972 for $35,000. He received the home in1989 when his

John inherited a summer home in Burlington, Vermont. His dad had the home built in 1972 for $35,000. He received the home in1989 when his dad died. The property was worth $150,000 at his father's death. Since this time, John has made $130,000 of improvements.

Vacation Home - FMV Land200,000(Owned by John)Vacation Home - FMV Building550,000(Owned by John)

What is the cost basis of vacation home?

Current and Future Economic Information:Risk-free Rate3.00% Market Risk Premium7.00% Market Standard Deviation11.00% Inflation Rate2.85%

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