Reid Had a Business Building Destroyed in a Fire

question 80

Essay

Reid had a business building destroyed in a fire. The old building was purchased for $375,000, and $60,000 of depreciation deductions had been taken. Although the old building had a fair market value of $425,000 at the time of the fire, his insurance proceeds were limited to $400,000. Reid found qualified replacement property that he acquired six months later for $390,000. What is the amount of Reid's realized gain and recognized gain?

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Definitions:

Neural Signaling

The process by which neurons communicate with each other through electrical and chemical signals.

Sensory Information

Data received and processed by sensory receptors pertaining to stimuli from the environment or the body itself, critical for perception and response.

Membrane Potential

The electrical potential difference across a cell's membrane, which affects the movement of ions and the activity of the cell.

Voltage-Gated

Pertaining to channels on cell membranes that open or close in response to changes in electrical membrane potential.