A homeowner bought a house five years ago for $75,000. Since then, the homeowner has spent $3,000 to pave the driveway and has added a central heating/air conditioning system at a cost of $4,000. The neighboring property owner paid $1,000 for an easement to use the new driveway. What is the homeowner's adjusted basis if the house is sold today? * $81,000

$69,000

$83,000

$75,000

correct answer is a. $81,000

Explanation:

given data

homeowner bought = $75,000

time = 5 years

homeowner spent = $3,000

central heating or air conditioning cost = $4,000

neighboring property owner paid = $1,000

solution

we get here homeowner adjusted basis if house sold today that is

homeowner adjusted basis = homeowner bought + homeowner spent + air conditioning cost - neighboring property owner paid ... 1

put here value and we get

homeowner adjusted basis = $75,000 + $3,000 + $4,000 - $1,000

homeowner adjusted basis = $81,000

so correct answer is a. $81,000