Michelle purchased her home for $150,000, and subsequently added a garage costing $25,000 and a new porch costing $5,000. Repairs to the home's plumbing cost $1,000. The adjusted basis in the home is

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The adjusted basis is calculated by adding the cost of improvements to the purchase price. The garage and porch are improvements, so $150,000 + $25,000 + $5,000 = $180,000. Repairs do not add to the basis.

Michelle Purchased Her Home for $150,000, and Subsequently Added a Garage