Question

Mark for follow up Question 4 of 30. Derek purchased an office building in 2017 for $150,000 (including land value of $35,000). Which of the following items decreases his basis? O O O O $1,500 cost of lawn maintenance. $4,300 depreciation claimed. $5,000 spent to repair roof damage from a hailstorm. $3,000 assessment by Derek's local government for extending water lines to the property.

Answer 1

The correct answer is :- $ 4300 depreciation claimed.

Explanation:- Any item that represents a return on capital reduces the basis of a property. Depreciation allows the owner to recover the cost of an asset which is used for business purpose over the useful life of the property. Thus the $ 4300 depreciation claimed reduces the basis of the office building.