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:

Reclining Figures

This refers to statues, sculptures or other representations of figures lying down, often used in art to depict relaxation, sleep, or death.

Tomb of the Leopards

An Etruscan burial chamber dating from the 5th century BCE, famous for its wall paintings depicting a banquet scene with leopards.

Banquet

A large formal meal for many people, often involving multiple courses and a set menu, typically held for a special occasion or celebration.

Etruscan Cemetery

An ancient burial site associated with the Etruscans, a pre-Roman civilization in Italy, known for their richly decorated tombs and funerary art.