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Determine the treatment of a loss on rental property under the following facts: Basis $650,000 FMV before the loss 800,000 FMV after the loss 200,000

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ijaz4308

Answer:

$600,000

Explanation:

The loss on the rental property in the given question will be lower of the following two limits:

1. Decline in FMV of the property

2.Basis amount

Decline in FMV of the property=FMV before the loss-FMV after the loss

                                                  =800,000-200,000

                                                  =$600,000

                                          Basis=$650,000

So based on the above discussion, the loss in the given scenario shall be $600,000

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