D owns a new pizza restaurant.She converted her home, which she had purchased for $75,000 for use in the business when it was worth $70,000.Which of the following is not true of the home's basis for the business?
A)$75,000 is used for determining depreciation.
B)$70,000 is used for determining loss.
C)$75,000 is used for determining gain.
D)The basis must be adjusted for depreciation allowed or allowable for determining either gain or loss.

Question

Quizplus · Accepted Answer

For business property converted from personal use, the basis for depreciation is the lower of the property's adjusted basis or its fair market value at the time of conversion. Since the home was worth $70,000 at the time of conversion, that becomes the basis for depreciation, not the original purchase price of $75,000.

D Owns a New Pizza Restaurant