Williams Owned an Office Building (But Not the Land) That

question 5

Essay

Williams owned an office building (but not the land) that was destroyed by a fire. The building was insured and he has a $156,000 gain because his insurance recovery exceeded his adjusted basis for the building. Williams may replace the building. He had taken $145,000 of depreciation on the building, has no § 1231 lookback loss, has no other § 1231 transactions for the year, and has no Schedule D transactions for the year. What is final nature of his gain for the
year and what tax rate(s) apply to the gain if:

a. He does reinvest the insurance proceeds.

b. If he does not reinvest the insurance proceeds.

---

Definitions:

Speech

The verbal expression of or the ability to express thoughts and feelings by articulate sounds.

Produce

To create or generate something, often referring to the production of goods, agricultural products, or creative outputs.

Everyday Activities

Routine tasks and behaviors that individuals engage in on a daily basis, such as eating, working, and socializing.

Dementia

A chronic or persistent disorder of the mental processes caused by brain disease or injury, marked by memory disorders, personality changes, and impaired reasoning.