Lynn purchases a house for $52,000. She converts the property to rental property when the fair market value is $115,000. After deducting depreciation (cost recovery) expense of $1,130, she sells the house for $120,000. What is her recognized gain or loss?
A) $0
B) $6,130
C) $37,630
D) $69,130
E) None of the above

Question

Quizplus · Accepted Answer

The recognized gain is calculated as the selling price ($120,000) minus the adjusted basis (original purchase price $52,000 + $63,000 increase in FMV - $1,130 depreciation), resulting in a gain of $69,130.

Lynn Purchases a House for $52,000