Question: I need help with this question for my accounting 3486 Federal taxation course that uses the book Pearson's 2019 Federal Taxation for individuals. The Smiths

I need help with this question for my accounting 3486 Federal taxation course that uses the book Pearson's 2019 Federal Taxation for individuals.

The Smiths owned and occupied their principal residence, with an adjusted basis of $250,000, for ten years. The house is destroyed by a tornado and the Smiths receive insurance proceeds of $800,000. Six months later, they purchase another residence for $850,000.

What is the amount of gain the Smiths must recognize?
What is the basis of the new residence?

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