fees for the purchase were 3500 and foes ware 260 Later O Hs

fees for the purchase were 3500, and foes ware 260 Later, O Hs basis is $300,000, because of the room addition purohase price. The insurance payment is deducted from the bavi O His basis$301,780 because insurance proceeds d not ano, bass

Solution

An expense is to be capitalized if it either increases asset efficiency or its useful life.all other expenses to be charged to revenue.

a repair expense should be charged to revenue if it doesnot constitute major repair or replacement of part of asset.

so In the given problem ,since the property calls for repair due to natural disaster (storm) ,it will be treated as major repair to property.

So correct option is \"C\"-basis of property is 301280

Explanation:

cost of property	275000
legal expense	500
Recording fees	280
Addition to house	25000
Major repair	1000
less:insurance proceeds	(500)
Basis in property	301280