On February 20,2010,Susan paid $200,000 for a unique leasehold improvement to an office building that she is going to lease to John.The lease will begin on June 1,2010,and terminate on May 31,2025.At the termination of the lease,the improvement will be worthless.Determine Susan's deductible loss as a result of the termination of the lease.

Question

Quizplus · Accepted Answer

The correct answer is B because the deductible loss is the difference between the cost of the leasehold improvement and the salvage value at the end of the lease term. The cost of the leasehold improvement is $200,000 and the salvage value is $0, so the deductible loss is $200,000 - $0 = $200,000.

On February 20,2010,Susan Paid $200,000 for a Unique Leasehold Improvement