The Building Used in Terry's Business Was Condemned by the City

question 52

Multiple Choice

The building used in Terry's business was condemned by the city of St.Louis.Terry received a condemnation award of $125,000.He paid $1,200 in lawyer's fees and $800 for an appraisal of the property.Terry's adjusted basis in the building was $60,000.Terry reinvests in similar property costing $110,000,and Terry makes the proper election regarding the property.What is the amount of Terry's recognized gain on the condemnation?

• A)$15,000
• B)$13,000
• C)$50,000
• D)$63,000

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Definitions:

Tax

A mandatory monetary fee or a different kind of tax placed on an individual or entity by a government agency.

Producer Surplus

The gap between the minimum amount that sellers are prepared to accept for a product or service and the higher price they actually get.

Consumer Surplus

The deviation between what consumers intend and are able to spend on a good or service compared to their final payment.

Tax

A financial charge or levy imposed by a government on individuals or entities to fund public expenditure, creating government revenue.