1. A warehouse with an adjusted basis of $125,000 was destroyed by a tornado on April 15, 2015. On June 15, 2015, the insurance company paid the owner $195,000. The owner reinvested $170,000 in another warehouse. What is the basis of the new warehouse if non-recognition of gain from an involuntary conversion is elected?
a.$100,000.
b.$125,000.
c.$170,000.
d.$195,000
2. A warehouse with an adjusted basis of $250,000 was destroyed by a tornado on April 15, 2015. On June 15, 2015, the insurance company paid the owner $395,000. The owner reinvested $470,000 in a new warehouse. What is the basis of the new warehouse if non-recognition of gain from an involuntary conversion is elected?
a.$105,000.
b.$250,000.
c.$325,000.
d.$395,000.