Josh Purchases a Personal Residence for $278,000 but Subsequently Converts

question 1963

Multiple Choice

Josh purchases a personal residence for $278,000 but subsequently converts the property to rental property when its FMV is $275,000. Assume depreciation of $65,000 has been deducted after conversion to rental use. If Josh sells the property for $280,000, his gain or loss will be

• A) $67,000 gain.
• B) $70,000 gain.
• C) $5,000 gain.
• D) $2,000 gain.

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Definitions:

Stroboscopic Motion

An optical illusion where continuous motion is represented by a series of short or instantaneous samples, as seen in motion pictures.

Motion Aftereffects

A visual phenomenon where exposure to a moving visual stimulus leads to the perception of motion in the opposite direction when the stimulus is removed.

Shape Constancy

The cognitive ability to recognize objects as the same despite changes in their shape, size, or orientation.

Rectangular

Pertaining to or shaped like a rectangle, having four sides and four right angles.