Which of the following is considered a key factor when determining the basis for investment property?

Determining the basis for investment property involves considering various factors, but the adjusted basis is a crucial aspect. The adjusted basis takes into account not only the original purchase price but also any improvements made to the property and any depreciation that has been claimed. This means that if you have made substantial changes to the property that enhance its value, those must be added to the basis. Conversely, if the property has depreciated over time due to wear and tear, this amount will reduce the basis.

Using the adjusted basis provides a more accurate reflection of what the taxpayer has invested in the property over time. For tax purposes, it's this adjusted basis that ultimately impacts calculations for gain or loss when the property is sold. Without considering improvements and depreciation, the basis would not accurately reflect the current value relating to tax obligations.

In contrast, while the original purchase price and fair market value at purchase are important for establishing initial value, they do not provide the comprehensive picture needed for calculating the adjusted basis when determining capital gains or losses upon sale. Appraised value at the time of sale is also not relevant for determining basis, as it relates to current market conditions rather than the historical investment and changes to the property.