An office building in Denver , CO was purchased for $6,500,000.Closing costs incurred in acquiring the building was $150,000.This investment will be used for rental purposes. The land basis is 15%.Of the remaining depreciable basis, personal property is 8%.The property is placed in service on January 1, 2018 and sold on December 31, 2019.The cost recovery periods are 39.0 years for real property (mid-month convention) and 7 years for personal property (MACRS table 14.29% and 24.49%).(assume no Section 179 or bonus depreciation)

a.What is the basis of the land, building and personal property at the time of acquisition?

b. What is the adjusted basis of the land, building and personal property at the time of sale? (Looking for the adjusted basis to calculate the gain or loss on sale)

c. Calculate the tax liability assuming the property (land building and personal property) is sold for $7,125,000.(Ignore the 3.8% NIIT) The taxpayer's marginal tax rate is 35%.$500,000 of the purchase price is allocated to the personal property.The balance of the purchase price is allocated $1,250,000 and 5,375,000 to the land and building, respectively.