General formula for calculating adjusted basis of property

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Leon sold a piece of business equipment that had an adjusted basis to him of $40,000 for $65,000 cash plus artwork that had a fair market value of $15,000. The buyer assumed Leon's $20,000 loan on the equipment. Leon paid $3,000 in selling expenses.

a. Identify and describe the general formula for calculating the adjusted basis of property.

b. What is Leon's recognized gain

Reference no: EM13141600

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