Lynn purchases a house for $52,000. She converts the property to rental property when the fair market value is $115,000. After deducting depreciation (cost recovery) expense of $1,130, she sells the house for $120,000. What is her recognized gain or loss?
a. $0.
b. $6,130.
c. $37,630.
d. $69,130.

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andromache andromache · Answer 1 · 2020-11-09T01:34:03+01:00

Answer:

d. $69,130.

Explanation:

The computation of the recognized gain or loss is shown below:

= Sale value of the house - (Purchase value of the house - depreciation expense)

= $120,000 - ($52,000 - $1,130)

= $120,000 - $50,870

= $69,130

Hence, the above amount represents the recognized gain

Therefore the correct option is d. $69,130

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