Gene purchased an SUV for $45,000 which he uses 100% for personal purposes. When the SUV is worth $30,000, he contributes it to his business. The gain basis is $45,000, the loss basis is $30,000, and the basis for cost recovery is $45,000.

Question

Quizplus · Accepted Answer

The loss basis should be the lower of the cost basis or the fair market value at the time of contribution, which in this case is $30,000. Therefore, the loss basis is $30,000, not $45,000.

Gene Purchased an SUV for $45,000 Which He Uses 100