On February 24, 2022, Allisons building, with an adjusted basis of $1,300,000 (and used in her trade or business), is


On February 24, 2022, Allison’s building, with an adjusted basis of $1,300,000 (and used in her trade or business), is destroyed by fire. On March 31, 2022, she receives an insurance reimbursement of $1,650,000 for the loss. Allison invests $1,550,000 in a new building and buys stock with the balance of insurance proceeds. Allison is a calendar year taxpayer.

a. By what date must Allison make the new investment to qualify for the nonrecognition election?

b. Assuming that the replacement property qualifies as similar or related in service or use, what are Allison’s realized gain, recognized gain, and basis in the replacement building?

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Related Book For  answer-question

South Western Federal Taxation 2023 Comprehensive Volume

ISBN: 9780357719688

46th Edition

Authors: Annette Nellen, Andrew D. Cuccia, Mark Persellin, James C. Young

Question Details
Chapter # 13- Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges
Section: Discussion Questions
Problem: 39
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Question Posted: September 24, 2023 07:46:56