Land Contract

[PaulF]

I have a client who entered into a land contract to purchase a commercial building. He leased the building to his corporation.

After three years he walked away from the contract and leased a commercial office for his business.

My question is what should the sales price of the building be when calculating the adjusted basis after the three years?

He gave me an amortization statement showing the monthly principal and interest payments when he started the contract and this is where I calculated the interest payments each year for the Schedule E.

[Roland Slugg]

My question is what should the sales price of the building be when calculating the adjusted basis after the three years?

Your question is a non sequitur. The selling price is the loan balance, and the basis is the cost ... i.e. the contract price ... plus additions and improvements, if any, less depreciation allowed or allowable.

[PaulF]

Thanks, Roland!

Using the remaining loan balance allocated between the building and land was the way I was thinking it should be done.