In 2015, Meredith purchased a wooden boat from Boats&Lumber…
In 2015, Meredith purchased a wooden boat from Boats&Lumber in Oklahoma for $125,000. Meredith did not have quite enough cash to make the entire purchase out of pocket, so she ended up putting down $10,000 and financed the remaining $115,000 purchase with a loan from EquityLoans, Inc. After purchasing the boat, Meredith hired a professional painter to paint and seal the boat in order to protect the wood at a cost of $50,000. 1. What is Meredith’s original cost basis in the boat? 2. Does Meredith have to make any adjustments to her basis in the boat? If so, what adjustments must be made? 3. What is Meredith’s adjusted basis in the boat?