Juan Owned a Small Rental Property, Which Was Condemned by the County

question 74

Multiple Choice

Juan owned a small rental property, which was condemned by the county to expand a local park.His adjusted basis in the property was $40,000 and he received a payment of $75,000 from the county.A year later he purchased a similar piece of real estate for $70,000.What is Juan's recognized gain on the involuntary conversion of his rental property?

• A)$5,000
• B)$10,000
• C)$30,000
• D)$35,000

---

Definitions:

Initial Investment

The amount of money used to start a project, purchase assets, or establish a business foundation.

Simple Rate Of Return

A method of calculating the return on an investment without taking into account compound interest or the passage of time.

Cash Operating Costs

Direct expenses incurred during regular operations, such as manufacturing costs, labor, and raw materials, excluding non-cash costs like depreciation.

Automating

involves the use of systems and technology to perform tasks with minimal human intervention.