Question
The answer in the bod is not correct. Please help me. 4. . Tara owns a house that she has been living in for eight
The answer in the bod is not correct. Please help me.
4. . Tara owns a house that she has been living in for eight years. She purchased the house for
$200,000 and the FMV today is $ 160,000. She is moving into herfriends house and has decided to convert her residence to rental property. Assume 20% of thepropertys value is allocated to land.
Requirement
a. What is the basis of the house for depreciation? is $ 128,000
b. Requirement b. If she claims depreciation of $12,800 and sells the property six years later for $310,000 (20% allocated toland), determine the gain on the sale of the building and gain on the sale of the land.
| House | Land | ||
| Amount realized | $248,000 | $62,000 | |
| Less: | Adjusted basis | (147,200) | (40,000) |
| Realized gain (loss) | $100,800 | $22,000 | |
Requirement c. How much of the gain is due to depreciation?
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Auditing And Other Assurance Services
Authors: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Ingrid B. Splettstoesser
10th Canadian Edition
0131296159, 978-0131296152
