Patty's Factory Building,which Has an Adjusted Basis of $475,000,is Destroyed

question 80

Essay

Patty's factory building,which has an adjusted basis of $475,000,is destroyed by fire on April 8,2013.Insurance proceeds of $500,000 are received on June 1,2013.She has a new factory building constructed for $490,000,which she occupies on October 1,2013.Assuming Patty's objective is to minimize the tax liability,calculate her recognized gain or loss and the basis of the new factory building.

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Definitions:

Conscious Experiences

Direct awareness or perception of events, feelings, or thoughts at any given moment.

Survival

The act or process of continuing to live or exist, particularly under threatening conditions or after a life-threatening event.

Adaptation

The process by which an organism or species becomes better suited to its environment through changes in physical form, function, or behavior.

William James

An American philosopher and psychologist, regarded as one of the founding figures of modern psychology.