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Zack purchased a plot of land (plot A) for $150,000 in October of Year 1. He pays $15,000 inbrokerage and legal fees associated with the acquisition of the land. In November of Year 7,Zack sells the land to Xavier for $300,000. In January of Year 8, Zack purchases another plotof land (plot B) for $200,000. In December of Year 8, Zack discovers that a zoning law will prevent him from building the hotel he planned to construct on the land. As a result, he sellsthe plot B for $180,000. What was Zack’s Adjusted Basis in plot A at the time of sale? What was Zack’s Adjusted Basis in plot B at the time of sale? How much tax does Zack owe in Year 7? How much tax does Zack owe in Year 8?
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