Final answer:
Casualty loss deductions decrease the original basis of property to determine the adjusted basis, as they result in a value decrease. Assessments for local improvements, capital improvements, and legal fees typically do not reduce the basis.
Step-by-step explanation:
To determine the adjusted basis of property, certain items can increase or decrease the original cost basis. When considering which of the following will decrease the original basis of property to determine the adjusted basis, the correct answer is casualty loss deductions.
Assessments for local improvements, such as sidewalks or sewer systems, typically do not affect the basis of property. Instead, they are treated separately for tax purposes. Capital improvements add value to the property and extend its life, therefore they actually increase the basis, not decrease it. Legal fees associated with the purchase of the property are added to the basis, rather than subtracting from it.
In summary, casualty loss deductions resulting from events like thefts, accidents, or natural disasters reduce the basis because they represent a decrease in the value of the property. These deductions allow property owners to reduce their taxable income to account for the loss in property value.