Ms. Seagram paid $155,000 for a house that she occupied as her principal residence until February 1, when she moved out and converted the house to rental property. The appraised FMV of the house was $140,000. She leased the house to tenants who purchased it on November 18. Her realized loss on the sale was $24,700, computed as follows. 

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Amount realized $125,000 Original cost basis $155,000 MACRS depreciation during rental period (5,300) Adjusted basis (149,700) $ (24,700)