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:

Highest Pressures

The maximum level of pressure that a system, container, or fluid can withstand safely during operation.

Spiral Wire Braid

A type of reinforcement used in hoses or cables, consisting of a spiral wrap of wire to provide strength.

ISO 32

A classification of industrial and hydraulic fluids, indicating a medium viscosity grade according to the International Standards Organization.

Viscosity Grade

A classification indicating the thickness or fluidity of a lubricant, with higher numbers denoting thicker oils.