Tina purchases a personal residence for $278,000,but subsequently converts the property to rental property when its FMV is $275,000.Assume depreciation of $65,000 has been deducted after conversion to rental use.If Tina sells the property for $200,000,her realized gain or loss will be
A)($10,000)loss.
B)($13,000)loss.
C)($75,000)loss.
D)($78,000)loss.

Question

Quizplus · Accepted Answer

The realized loss is the difference between the selling price and the adjusted basis. The adjusted basis is the original cost plus any improvements minus any depreciation. In this case, the adjusted basis is $278,000 - $65,000 = $213,000. The realized loss is $213,000 - $200,000 = $13,000.

Tina Purchases a Personal Residence for $278,000,but Subsequently Converts the Property