On June 1 of the Current Year, Tab Converted a Machine

Multiple Choice

On June 1 of the current year, Tab converted a machine from personal use to rental property.At the time of the conversion, the machine was worth $90,000.Five years ago, Tab purchased the machine for $120,000.The machine is still encumbered by a $50,000 mortgage.What is the basis of the machine for cost recovery?

A) $70,000
B) $90,000
C) $120,000
D) $140,000
E) None of these.