Kristi Had a Business Building Destroyed in an Earthquake

question 98

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:

Palpebrae

Another term for eyelids, which protect and moisten the eyes by spreading tear fluid and limiting the amount of light entering the eye.

Eyelids

Flexible covers that can close to protect the eye from injury and help keep the eye moist by spreading tears over its surface.

Anterior Sclera

The front part of the sclera, the white outer layer of the eyeball, providing structure and protection.

Otoliths

Otoliths are small, calcified particles in the inner ear that play a crucial role in sensing gravity and movement, aiding in balance and spatial orientation.