Sam's Office Building with an Adjusted Basis of $750,000 and a Fair

question 187

Multiple Choice

Sam's office building with an adjusted basis of $750,000 and a fair market value of $900,000 is condemned on November 30,2013.Sam is a calendar year taxpayer.He receives a condemnation award of $875,000 on March 1,2014.He builds a new office building at a cost of $845,000 which is completed and paid for on December 31,2016.What is Sam's recognized gain on receipt of the condemnation award and basis for the new office building assuming his objective is to minimize gain recognition?

• A)$0; $720,000.
• B)$30,000; $750,000.
• C)$30,000; $845,000.
• D)$150,000; $750,000.
• E)None of the above.

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Definitions:

Concurrent Engineering

An approach to product development where functions are performed in parallel and design activities are integrated to reduce the time to market.

Product Development

The process of bringing a new product to market, including conception, design, creation, and marketing.

Team Approach

A strategy that relies on collaboration and collective effort among group members to achieve goals.

Natural Physical

Refers to phenomena or processes that occur in the natural world and involve physical properties.