Final answer:
Assessments for local improvements decrease the original basis of property to determine the adjusted basis.
The correct option is A. Assessments for local improvements.
Step-by-step explanation:
The correct answer is A. Assessments for local improvements. Assessments for local improvements, such as property taxes, are expenses that decrease the original basis of property to determine the adjusted basis. They reduce the amount of money you initially invested in the property and, therefore, lower the adjusted basis.
Capital improvements, on the other hand, increase the adjusted basis of the property. These are improvements that extend the useful life of the property or increase its value.
Casualty loss deductions may also decrease the adjusted basis of the property. If you experience a loss due to theft, accident, natural disaster, or other similar events, you can deduct the amount of the loss from your adjusted basis.
The correct option is A. Assessments for local improvements.