Question

When Marcus sent his daughter to college, he purchased a house near campus for $95,000. Empty lots in the area sold for approximately $10,000 at the time. After she graduated, Marcus decided to keep the house for use as a rental. The fair market value at the time of the conversion was $160,000 and the price of the land had risen to $20,000. The basis for depreciation of the house is __________.(A) $85,000(B) $95,000(C) $105,000(D) $140,000

Answer 1

correct answer is (A) $85,000

Step-by-step explanation:

given data

purchased house = $95,000

Empty lots area sold = $10,000

fair market value = $160,000

land price rise = $20,000

solution

we can say here that fair market value is more than the fair preface of home

so adjusted introduce will be explanation behind weakening

and

basis depreciation of the house will be

basis depreciation of the house = $95000 - $10000

basis depreciation of the house = $85000

so correct answer is (A) $85,000