Question

arianna's personal residence has an adjusted basis of $346,650 and a fair market value of $311,985. arianna converts the personal residence to rental property. what is arianna's gain basis? what is her loss basis?

Answer 1

Arianna's gain basis, given the adjusted basis of the personal residence can be found to be $311,985

How to find the gain basis ?

Arianna's gain basis is calculated based on the fair market value and the adjusted basis.

If the fair market value ($311,985) is less than the adjusted basis ($346,650), then her gain basis is equal to the fair market value.

In this case, her gain basis is $311,985. If the fair market value is greater than the adjusted basis, there is no loss basis because she has not incurred a loss on the property at the time of conversion.