Beulah's personal residence has an adjusted basis of $450,000 and a fair market value of $390,000.Beulah converts the property to rental use on November 1,2011.The vacation home rules that limit the amount of the deduction to the rental income will apply and the adjusted basis for depreciation is $390,000.

Question

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The adjusted basis for depreciation when converting a personal residence to rental use is the lesser of the property's adjusted basis or its fair market value at the time of conversion. Therefore, the adjusted basis for depreciation should be $390,000, but the vacation home rules mentioned do not apply to this situation.

Beulah's Personal Residence Has an Adjusted Basis of $450,000 and a Fair