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.

---

Definitions:

Cumulative Investment

The total amount of money that has been invested over a period, including reinvested earnings.

Extra Funds

Additional money available beyond what is necessary for regular expenses, which can be saved or invested.

Input Costs

Expenses that are incurred in order to produce goods or services.

Beverages

Liquid drinks, which can be alcoholic or non-alcoholic, consumed for refreshment or pleasure.