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

question 49

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

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Definitions:

Restoration Cost

The expenditure required to return a damaged asset to its previous condition or to a condition deemed acceptable.

Potential Buyers

Individuals or organizations that have the interest and ability to purchase goods or services but have not yet made a transaction.

Additional Work

Tasks or assignments added beyond the original scope or requirements, often resulting in extra costs or extended timelines.

Marginal Cost

The rise in overall expenses due to the production of an additional unit.