Dana purchases an automobile for personal use for $27,000. After using it for three years, Dana converts the automobile to business use when the fair market value is $19,000. What is Dana's basis for deprecation purposes?
A) $ - 0 -
B) $19,000
C) $27,000
D) The automobile cannot be depreciated.

Question

Quizplus · Accepted Answer

When an asset is converted from personal to business use, the basis for depreciation is the lesser of the asset's adjusted basis or its fair market value at the time of conversion. In this case, the fair market value is $19,000, which is less than the original purchase price of $27,000.

Dana Purchases an Automobile for Personal Use for $27,000