Let\'s spend some more time considering TCO 6 with another practice quiz questio

Question

Let's spend some more time considering TCO 6 with another practice quiz question. Steve purchased his home for $500,000. As a sole proprietor, he operates a certified public accounting practice in his home. For this business, he uses one room exclusively and regularly as a home office. In year 1, $3,042 of depreciation expense on the home office was deducted on his income tax return. In year 2, Steve sustained losses in his business; therefore, no depreciation was taken on the home office. Had he been allowed to deduct depreciation expense, his depreciation expense would have been $3,175. What is the adjusted basis in the home? $493,783 $496,825 $496,958 $500,000 None of the above Please state and justify your response. Thanks.

Explanation / Answer

Answer:

Answer should be $ 4,93,783.

i.e 500000- (3042+3175) = $ 493783

Thanks

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