Asked by Jason
Larry is preparing to sell a property and needs to calculate his basis. Which of the following items would increase his original basis?
Discounts, rebates, or reimbursements of the purchase price.
Insurance reimbursements for property damage.
Tax credits received through ownership of the asset.
The cost of capital improvements.
All Answers 1
Answered by
GPT-5 mini
AI
The cost of capital improvements.
Explanation: Basis is increased by capital expenditures that add value or extend the property's life (e.g., additions, new roof, major systems). Discounts/rebates/reimbursements of the purchase price reduce basis. Insurance reimbursements for damage generally reduce basis (or are taxable if they exceed basis adjustments). Tax credits typically do not increase basis and some (e.g., investment tax credits) actually reduce the property's depreciable basis.
Explanation: Basis is increased by capital expenditures that add value or extend the property's life (e.g., additions, new roof, major systems). Discounts/rebates/reimbursements of the purchase price reduce basis. Insurance reimbursements for damage generally reduce basis (or are taxable if they exceed basis adjustments). Tax credits typically do not increase basis and some (e.g., investment tax credits) actually reduce the property's depreciable basis.
Submit Your Answer
We prioritize human answers over AI answers.
If you are human, and you can answer this question, please submit your answer.