Bob owns a rental property that he bought several years ago for $250,000. He has taken depreciation on the house of $35,000 since buying it. He sells it in 2015 for $290,000. His selling expenses were $12,000 for the year. What was Bob's realized gain on the sale?

Question

Quizplus · Accepted Answer

Bob's adjusted basis for the rental property is the original cost of $250,000 minus the accumulated depreciation of $35,000, which equals $215,000.

Bob's realized gain on the sale is the selling price of $290,000 minus the adjusted basis of $215,000, which equals $75,000.

However, Bob incurred selling expenses of $12,000, so his recognized gain is $63,000 ($75,000 - $12,000). Therefore, the answer is C.

Bob Owns a Rental Property That He Bought Several Years