On June 1 of the Current Year,Tab Converted a Machine

question 10

Multiple Choice

On June 1 of the current year,Tab converted a machine from personal use to rental property.At the time of the conversion,the machine was worth $90,000.Five years ago Tab purchased the machine for $70,000.The machine is still encumbered by a $50,000 mortgage.What is the basis of the machine for cost recovery?

• A)$70,000.
• B)$90,000.
• C)$120,000.
• D)$140,000.
• E)None of the above.