Which of the following will decrease the original basis of property to determine the adjusted basis?

• A. Depreciation expense taken on the property
• B. Assessment for local improvements
• C. Cost of acquiring the property
• D. Additional capital improvements made to the property

Answer: (A)

Verified step by step guidance

1. Understand the concept of 'basis' in property accounting: The original basis of a property is typically the cost of acquiring the property, including purchase price and associated costs. The adjusted basis is calculated by modifying the original basis for certain factors such as depreciation, improvements, and other adjustments.
2. Identify the factors that decrease the original basis: Depreciation expense is a reduction in the value of the property over time due to wear and tear, obsolescence, or usage. This expense decreases the original basis of the property when calculating the adjusted basis.
3. Analyze the other options: Assessment for local improvements, cost of acquiring the property, and additional capital improvements made to the property do not decrease the original basis. Instead, they either increase the basis or are part of the original basis calculation.
4. Apply the rule for adjusted basis calculation: To determine the adjusted basis, subtract depreciation expense from the original basis. Other factors, such as capital improvements, are added to the original basis rather than subtracted.
5. Conclude the correct adjustment: Depreciation expense taken on the property is the factor that decreases the original basis to determine the adjusted basis.