Question
Mr. and Mrs. Steve Grady recently purchased oceanfront property in New Jersey for $3,000,000. On the oceanfront property, there is an existing small house that
Mr. and Mrs. Steve Grady recently purchased oceanfront property in New Jersey for $3,000,000. On the oceanfront property, there is an existing small house that the Gradys are planning to demolish. The cost attributable to this small house is $300,000 of the $3,000,000 purchase price of the property but it is unclear how this $300,000 is determined. It will cost the couple $30,000 to pay to have the home demolished. However, the Gradys could donate the building to the local fire department. If donated by the Gradys, the local fire department would quickly burn down the small house as part of the firefighter training program.
Issue to Resolve#1
If the Gradys choose to donate the small house to the local fire department for the firefighter training program, can the Gradys deduct the $300,000 attributed to the cost of the small house as a charitable donation?
Issue#2
Can the Gradys deduct $300,000 attributed to the cost of the small house as a capital loss on the Gradys tax return due to the loss of the house from demolition
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started