Sergio was required by the city to pay $2,000 for the cost of new curbing installed by the city in front of his personal residence.The new curbing was installed throughout Sergio's neighborhood as part of a street upgrade project.Sergio may not deduct $2,000 as a tax, but he may add the $2,000 to the basis of his property.

Question

Quizplus · Accepted Answer

According to IRS regulations, the cost of improvements that add value to a property, such as new curbing, can be added to the property's basis but cannot be deducted as a tax expense.

Sergio Was Required by the City to Pay $2,000 for the Cost