Basis of property at time of conversion for purposes of this section (that is, the lesser of $25,000 cost or $22,000 fair market value) | $22,000 |
Less: Depreciation allowable from January 1, 1952, to January 1, 1955 (3 years at 5 percent based on $12,000, the value of the building at time of conversion, as prescribed by § 1.167(g)-1 ) | 1,800 |
Adjusted basis prescribed in § 1.1011-1 for determining loss on sale of the property | 20,200 |
Less: Amount realized on sale | 16,000 |
Loss to be taken into account for purposes of section 165(a) | 4,200 |
In this example the value of the building at the time of conversion is used as the basis for computing depreciation. See example (2) of this paragraph wherein the adjusted basis of the building is required to be used for such purpose.
Basis of property at time of conversion for purposes of this section (that is, the lesser of $23,000 cost or $20,000 fair market value) | $20,000 |
Less: Depreciation allowable from January 1, 1953, to January 1, 1957 (4 years at 5 percent based on $10,000, the cost of the building, as prescribed by § 1.167(g)-1 | 2,000 |
Adjusted basis prescribed in § 1.1011-1 for determining loss on sale of the property | $18,000 |
Less: Amount realized on sale | 17,000 |
Loss to be taken into account for purposes of section 165(a) | 1,000 |
26 C.F.R. §1.165-9