Monica is planning to start her own accounting, tax, and financial planning business. Her uncle Gus has given her file cabinets, a desk, computer equipment, and bookcases that were in his den until he sold his house. Gus recently moved to a lakefront cottage and no longer needs the furniture and equipment. Gus’s adjusted basis for all the items is $3,500, and the fair market value is $2,000. Monica will convert 20% of her personal residence into her office and will use it exclusively for her business. Monica’s residence has a fair market value of $150,000 and an adjusted basis of $80,000 (10% is allocated to the land). What are the tax ramifications of the gifts and the conversion? What will be the depreciable basis of the property? Explain your answers in terms of the underlying concepts that govern the result.