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The basis of personal use property converted to business use is: Select one or more: A....

The basis of personal use property converted to business use is: Select one or more: A. Always the lower of its adjusted basis or fair market value on the date of conversion. B. Always its adjusted basis on the date of conversion. C. Always its fair market value on the date of conversion. D. Always the higher of its adjusted basis or fair market value on the date of conversion. E. None of the above.

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Answer #1

The Answer is A) Always the lower of its adjusted basis or fair market value on the date of conversion.

Adjusted Basis- Its the Amount paid for the Property Purchased Initially for the Personal Use. For Example If you bought a Laptop three years for $500 then the adjusted basis of the Laptop is $500.

fair market value- Except land and building , other assets value decrease over the time, So Generally Fair Market value is lower than the Adjusted basis.

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