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:

Visual Agnosia

A disorder of the brain making it difficult to recognize familiar objects or faces, despite having normal vision.

Identify

To recognize or establish as being a particular person or thing; to determine the identity of.

Rose

A type of flowering shrub in the genus Rosa, known for its fragrant flowers which are used in perfumery, gardening, and symbolic in various cultures.

Biochemical Activity

The complex interactions and processes involving biological molecules within living organisms.