Kristi Had a Business Building Destroyed in an Earthquake

question 99

Essay

Kristi had a business building destroyed in an earthquake. The old building was purchased for $250,000, and $80,000 of depreciation deductions had been taken. Her insurance proceeds were $550,000. Although the replacement property was much larger and nicer than her old building, Kristi's new property qualified as replacement property. She acquired the new property 13 months after the earthquake for $620,000. What is the amount of Kristi's realized gain and recognized gain and the basis in her new property?

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Definitions:

Metacognitive Strategies

Techniques used to help an individual understand, control, and manipulate their own cognitive processes.

Master Teacher

An educator recognized for their high level of skill, experience, and dedication in the teaching profession, often serving as mentors to less experienced teachers.

Encourage

To promote, support, or advocate for a certain behavior, action, or development through positive reinforcement or motivation.

Encoding

The mechanism by which information gets into memory.