Selling a converted asset is not that simple. Just as you used the lower of basis or FMV for depreciation, you must work out the gain/loss using both adjusted basis and FMV.
Calculating Gain/Loss on Subsequent Sale of converted Property (Regs. Sec. 1.168(i)-4(b)
If a personal use property is converted to business use property is later sold at a gain, the basis in the converted property is the original cost or other basis plus amounts paid for capital improvements, less any depreciation taken.
If the sale results in a loss, however, the starting point for basis is the lower of the property’s adjusted cost basis or FMV when it was converted from personal.
