Juan Owned a Small Rental Property,which Was Condemned by the County

question 35

Multiple Choice

Juan owned a small rental property,which was condemned by the county to expand a local park.His adjusted basis in the property was $40,000 and he received a payment of $75,000 from the county.A year later he purchased a similar piece of real estate for $70,000.What is Juan's recognized gain on the involuntary conversion of his rental property?

• A)0
• B)$5,000
• C)$10,000
• D)$30,000
• E)$35,000

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Definitions:

Ratio Analysis

A financial analysis tool used to assess a company's performance and financial health by calculating ratios from the data in financial statements.

Inventory Turnover

Inventory turnover is a ratio showing how many times a company has sold and replaced inventory over a given period.

Net Credit Sales

The total value of sales made on credit, minus returns and allowances, reflecting the true sales activity.

Average Inventory

The mean value of inventory within a specific period of time, calculated to assess the amount of stock a business typically holds.