Question

Yang converted her personal residence to rental property ten years ago. At the time of conversion, the fair market value of the house was $60,000. After taking depreciation deductions of $12,000, Yang sells the house for $68,000. If Yang paid $50,000 for the house, her adjusted basis in the house is:a. $30,000.b. $38,000.c. $48,000.d. $50,000.e. $60,000.

Answer 1

Answer:

c. $48,000

Explanation:

The adjusted basis is the fair value less/plus adjustments done by any consideration for tax experts. As adjustments, you can consider legal fees, restoration of damaged property, insurances, depreciation, etc. In this case, it is stated that depreciation was $12,000 and the Fair Value was $60,000. Therefore, the adjusted basis is 60,000-12,000 = 48,000