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:

Corporate Chain

A series of businesses or retail outlets owned and operated by a single company, offering uniform products or services.

Consumer Cooperative

A business owned and operated by the consumers it serves, where benefits and profits are distributed among the members.

Contractual System

A method of organization involving formal agreements between parties that specify the roles, responsibilities, and conditions of a business relationship.

Independent Retailer

An independent retailer is a business that is privately owned and operated, not part of a larger chain or franchise, offering a range of products or services to its customers.