T purchased unimproved land on april 1 of year one and commenced construction of
ID: 2419215 • Letter: T
Question
T purchased unimproved land on april 1 of year one and commenced construction of a vecation residence , which was completed on jan 2 of year three, before T even moved in , and on that date, B offered T 600000 for the house and land,. T’s cost baise for the land is 200000 and the the house is 300000 and the proposed purchase price is allocable 250000 for the land and 350000 for the house. It can also be established that construction of the house was 50 per cent completed on jan 1 of year two. What would be the consequences to T if the sale is affected on Jan 2 of year three?
Explanation / Answer
If sale is affected on Jan 2 of year 3 then it will be treated as long term capital asset and T will get the benefit of indexation on land and building. Long term capiatl asset is a assets wich is held for mor than 2 years. Thus T will get the benefit of indexation on sale of land and building.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.