Problem:
Carlton purchases land for $400,000. He incurs legal fees of $8,000 associated with the purchase. He subsequently incurs additional legal fees of $25,000 in having the land rezoned from agricultural to residential. He subdivides the land and installs streets and sewers at a cost of $700,000.
Required:
What is Carlton's basis for the land and the improvements?
Note: Please provide through step by step calculations.