Question

Rob and Lori purchased a home for $350,000 with an additional $5,000 in related purchase costs and then added a garage at a cost of $25,000. They sold the home for $450,000 and paid $28,000 in selling costs. How much was adjusted basis?

Answer 1

Answer: $380,000

Step-by-step explanation:

To calculate the adjusted basis, we add the original cost, to the improvement cost and and then deduct depletion and depreciation cost.

From the scenario, since Rob and Lori purchased a home for $350,000 with an additional $5,000 in related purchase costs and then added a garage at a cost of $25,000 and then sold the home for $450,000 and paid $28,000 in selling costs.

The adjusted basis will be:

= $350,000 + $5,000 + $25,000

= $380,000