Steven Seller owned and managed a clothing store that was destroyed by a hurricane. He received an insurance award of $200,000 for the store, which had an adjusted basis of $120,000. A year later he replaced the clothing store with another one for $225,000.

a. What is Seller’s realized and recognized gain or loss, and the basis of the replacement clothing store?

b. What is Seller’s realized and recognized gain or loss and the basis if he replaced the clothing store with a car repair shop which he managed?

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