An asset's adjusted basis is computed as:
A)Original basis + capital improvements − accumulated depreciation.
B)Original basis − capital improvements + accumulated depreciation.
C)Original basis + capital improvements + accumulated depreciation.
D)Original basis + capital improvements + gain or loss realized.
E)None of the above.

Question

Quizplus · Accepted Answer

The adjusted basis of an asset is calculated by subtracting any accumulated depreciation and adding any capital improvements to the original cost or basis of the asset. Therefore, option A: Original basis + capital improvements − accumulated depreciation is the correct formula for determining the adjusted basis of an asset.

An Asset's Adjusted Basis Is Computed As