Question

In: Accounting

Nancy converted her personal home to a rental in 2019 when the building improvements were valued...

Nancy converted her personal home to a rental in 2019 when the building improvements were valued at $233,000. She originally purchased the home and land for $300,000. When purchased, 25% percent of the value was allocated to the land on the county property tax assessment. There have been no improvements or other adjustments to basis since 2019. What is Nancy's basis for depreciation when converted in 2019? $174,750 $225,000 $300,000

Solutions

Expert Solution

Nancy's basis for depreciation when converted in 2019 will be $ 225,000 =300000*75%
Correct answer is option 2

Related Solutions

An investor is considering buying a rental duplex with land valued at $30,000 and the building...
An investor is considering buying a rental duplex with land valued at $30,000 and the building valued at $150,000. Straight-line depreciation over 27 1⁄2 years will be taken. The investor will be actively involved in the management of the property. He is in a 30% tax bracket. Assume potential gross income of $44,000 in year one, vacancy of 12% and Operating expenses equal to 40% of Effective gross income. Gross potential income is expected to increase by 2% each year...
An investor is considering buying a rental duplex with land valued at $30,000 and the building...
An investor is considering buying a rental duplex with land valued at $30,000 and the building valued at $150,000. Straight-line depreciation over 27 ½ years will be taken. The investor will be actively involved in the management of the property. He is in a 30% tax bracket. Assume potential gross income of $44,000 in year one, vacancy of 12% and Operating expenses equal to 40% of Effective gross income. Gross potential income is expected to increase by 2% each year...
An investor is considering buying a rental duplex with land valued at $30,000 and the building...
An investor is considering buying a rental duplex with land valued at $30,000 and the building valued at $150,000. Straight-line depreciation over 27 1⁄2 years will be taken. The investor will be actively involved in the management of the property. He is in a 30% tax bracket. Assume potential gross income of $44,000 in year one, vacancy of 12% and Operating expenses equal to 40% of Effective gross income. Gross potential income is expected to increase by 2% each year...
Rhonda rented her vacation home for 30 days when the Winter Olympics were held in the...
Rhonda rented her vacation home for 30 days when the Winter Olympics were held in the city. She received rent revenue was $6,000 which was a fair rental rate during this tourist season. She lived in the home 30 days. She paid a total of $7,300 for taxes and mortgage interest on the home. She paid utility expense and repair expense totaling $4,000. Total depreciation on the home is $8,000 per year. How much depreciation expense will she report on...
Lisa’s Darwin Home Lisa sold her home in Darwin (contract date September 2019, settlement December 2019),...
Lisa’s Darwin Home Lisa sold her home in Darwin (contract date September 2019, settlement December 2019), receiving $1,220,000 at settlement. This is after legal fees ($12,000), advertising ($2,000) and real estate commissions ($25,000) were deducted. Records indicate that Lisa purchased the property in 2002 (contract date January, settlement March) for $653,000. Legal fees, commissions and advertising of $8,000 were also incurred. Lisa moved in within 6 months, selling her former residence during that time. Over the ownership period, Lisa rented...
Question #6 After lunch, Nancy Williams calls up her personal banker to ask about two things....
Question #6 After lunch, Nancy Williams calls up her personal banker to ask about two things. One, she wants a 1-year education loan of $20,000 for her son, Phil and two, she is looking to take out a mortgage loan of $200,000. The banker offers the following choices: 1. Education loan of $20,000: A simple loan to be repaid after a year along with an interest of 10% p.a. or an amortized loan at an interest rate of 10% p.a....
Jerry​ Carter's home is currently​ valued, on a replacement cost​ basis, at $502,000. When he last...
Jerry​ Carter's home is currently​ valued, on a replacement cost​ basis, at $502,000. When he last checked his​ policy, his home was insured for $377,742 and he did not have an inflation guard endorsement. If he has a $40,010 claim due to a kitchen​ fire, how much will his​ homeowner's insurance policy​ pay? How much would be paid if his home were totally​ destroyed? In order to obtain full replacement​ coverage, how much insurance should Jerry carry on his​ house?...
Jerry​ Carter's home is currently​ valued, on a replacement cost​ basis, at ​$244,000. When he last...
Jerry​ Carter's home is currently​ valued, on a replacement cost​ basis, at ​$244,000. When he last checked his​ policy, his home was insured for $182,354 and he did not have an inflation guard endorsement. If he has a $17,230 claim due to a kitchen​ fire, how much will his​ homeowner's insurance policy​ pay? How much would be paid if his home were totally​ destroyed? In order to obtain full replacement​ coverage, how much insurance should Jerry carry on his​ house?...
a) When Jennifer goes on holiday she likes to take her camera, valued at £1000. Other...
a) When Jennifer goes on holiday she likes to take her camera, valued at £1000. Other than that, she doesn’t take much of value. Even if she is careful with the camera, there is still a 15% chance her camera either gets broken beyond repair or stolen. What does it mean to say that Jennifer is risk natural? If Jennifer is risk neutral, what is the expected value to her of owning the camera? b) Explain risk aversion, using Jennifer’s...
During 2019, Peter rented his vacation home for 90 days and spent 30 days. Gross rental...
During 2019, Peter rented his vacation home for 90 days and spent 30 days. Gross rental income from the property was $15,000. Peter incurred the following expense: Mortgage and Real Estate taxes 9000 Utilities 2500 Repairs and Maintenance 1200 Depreciation 4000 Using IRS method for vacation home, compute Peters deduction for the vacation home 1. Total mortgage interest and real estate taxes allocated to vacation home? 2. Total utilities allocated to vacation home? 3. Total repairs allocated to vacation home?...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT