An Office Building with an Adjusted Basis of $320,000 Was

question 43

Multiple Choice

An office building with an adjusted basis of $320,000 was destroyed by fire on December 30,2013.On January 11,2014,the insurance company paid the owner $450,000.The fair market value of the building was $500,000,but under the co-insurance clause,the insurance company is responsible for only 90 percent of the loss.The owner reinvested $410,000 in a new office building on February 12,2014,that was smaller than the original office building.What is the recognized gain and the basis of the new building if § 1033 (nonrecognition of gain from an involuntary conversion) is elected?

• A)$0 and $320,000.
• B)$0 and $410,000.
• C)$40,000 and $320,000.
• D)$130,000 and 410,000.
• E)None of the above.

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Definitions:

Elevated Mood

A state of heightened, improved or more positive mood compared to one's normal baseline mood.

Bipolar Disorder

A psychiatric disorder marked by severe changes in mood, encompassing periods of intense elation (mania or hypomania) and profound sadness (depression).

Mania

A mental state characterized by extremely elevated mood, energy, and unusual thought patterns, often associated with bipolar disorder.

Depression

A common and serious medical illness that negatively affects how you feel, the way you think, and how you act, leading to feelings of sadness and/or a loss of interest in activities.