During 2024, Lee purchased and placed in service a building for his auto repair business. The building cost $330,000, which included $90,000 for the land. What is Lee's depreciable basis?

Question

$90,000
$240,000
$330,000
$420,000

Answer 1

To determine Lee's depreciable basis for the building, you need to exclude the cost of the land, as land is not depreciable.

The total cost of the building was $330,000, and the portion allocated to the land was $90,000. Therefore, the depreciable basis of the building is calculated as follows:

\[ \text{Depreciable Basis} = \text{Total Cost} - \text{Cost of Land} \] \[ \text{Depreciable Basis} = 330,000 - 90,000 = 240,000 \]

Thus, Lee's depreciable basis for the building is $240,000.