Jordan paid $30,000 for equipment two years ago and has claimed total depreciation deductions of $15,600 for the two years. The cost of repairs during the same time period was $2,000 while a major overhaul which extended the life of the equipment cost $7,000. What is Jordan's adjusted basis in the equipment at the end of the two- year period?

Question

Quizplus · Accepted Answer

The adjusted basis is the original cost of the equipment minus the depreciation deductions plus the cost of repairs and major overhauls. So, the adjusted basis is $30,000 - $15,600 + $2,000 + $7,000 = $21,400.

Jordan Paid $30,000 for Equipment Two Years Ago and Has