Jane opens a specialty limousine service, as part of which she purchases a Rolls-Royce for $100,000. Over the subsequent two years, she claims tax depreciation of $20,000 on the Rolls-Royce. Thereafter, finding that the car has actually appreciated in value, she sells it for $110,000. What was Jane’s original cost basis in the Rolls-Royce, what was her adjusted basis at the time of the sale, and how much gain must she recognize at the time of the sale?

Jane opens a specialty limousine service, as part of which she purchases a Rolls-Royce for $100,000. Over the subsequent two years, she claims tax depreciation of $20,000 on the Rolls-Royce. Thereafter, finding that the car has actually appreciated in value, she sells it for $110,000. What was Jane’s original cost basis in the Rolls-Royce, what was her adjusted basis at the time of the sale, and how much gain must she recognize at the time of the sale?

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter11: Property Dispositions

Section: Chapter Questions

Problem 65P

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