Harry purchases a business. The purchase agreement stipulates the following: -Buyer pays $5,000 cash -Buyer...
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Accounting
Harry purchases a business. The purchase agreement stipulates the following:
-Buyer pays $5,000 cash
-Buyer assumes Seller's personal debt of $7,000
-Buyer receives $10,000 in receivables from the business which remains in the business.
-Seller pays Buyer's closing costs of $1,000
-Buyer gives Seller a car with a basis of $2,000 and a FMV of $5,000
What is Harry's basis in his new business?
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