Homework SourseAlexis purchased a rental house 3 years ago for 285000 Her d
Alexis purchased a rental house 3 years ago for $285,000. Her depreciation to date is $35,000. Due to a decrease in real estate prices, she sells the house for only $275,000 in the prior year. What is her gain or loss for tax purpose?
$0
$10,000 loss
$25,000 gain
$35,000 loss
$10,000 gain
| A. | $0 | |
| B. | $10,000 loss | |
| C. | $25,000 gain | |
| D. | $35,000 loss | |
| E. | $10,000 gain |
Solution
Purchase price of house = $285,000
Less: Depreciation =- $35,000
Book value of house on the date of sale = 285,000 - 35,000
= $250,000
Sale price of house = $275,000
Hence, gain on sale of house = 275,000 - 250,000
= $25,000
Hence, correct option is (c)
