An Office Building Owned by Abby and Used in Her

question 79

Essay

An office building owned by Abby and used in her business was destroyed in a fire.Abby's adjusted basis in the building was $145,000 and its FMV was $180,000.Abby filed an insurance claim and she was reimbursed $160,000.In that same year,Abby invested $150,000 of the insurance proceeds in another business building.
a.Assume Abby made the proper election with regard to the involuntary conversion.What is the amount of gain to be recognized by Abby?
b.What is Abby's basis in the new building?

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Definitions:

Traits Model

A framework in psychology that identifies and measures individual personality characteristics.

Leadership Performance

Refers to the effectiveness and outcomes of leadership actions in guiding and influencing a group or organization towards achieving its goals.

Consistent Trait

A characteristic or quality in an individual that is regularly observed in a wide range of situations over time.

Command-And-Control

An organizational design that emphasizes strict management and control over decision-making and worker actions.