Yohanse’s aunt Millie gives him a storage warehouse valued at $250,000 to use in his delivery business. The warehouse has been vacant since Millie inherited it from her grandfather several years ago. At that time, the warehouse had a value of $300,000 and a basis of $50,000.
a. What is Yohanse’s initial basis in the warehouse? Explain.
b. What is Yohanse’s depreciable basis for the warehouse? Explain.
c. Determine the holding period for Yohanse’s warehouse.