Question

Christine wants to sell come property but needs to determine the basis first. Which of the following items increase her original basis?

1) Discounts, rebates, or reimbursements of the purchase price
2) Insurance reimbursements for property damage
3) Tax credits received through ownership of the asset
4) The cost of capital improvements

Answer 1

Items that increase the original basis of a property are discounts, rebates, reimbursements of the purchase price, insurance reimbursements for property damage, and the cost of capital improvements.

Step-by-step explanation:

In order to determine the basis of the property, Christine should consider the following items that increase her original basis:

1. Discounts, rebates, or reimbursements of the purchase price: If Christine received any discounts, rebates, or reimbursements of the purchase price, these would increase her basis because she effectively paid less for the property.
2. Insurance reimbursements for property damage: If Christine received insurance reimbursements for any property damage, these would increase her basis because she would have used those funds to repair or replace the damaged property.
3. The cost of capital improvements: Any expenses incurred by Christine to make capital improvements to the property, such as adding a new roof or renovating the kitchen, would increase her basis.