Reid Had a Business Building Destroyed in a Fire

question 95

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 which he acquired six months later for $390,000. What is the amount of Reid's realized gain and recognized gain?

---

Definitions:

NASDAQ Stock Market

An American stock exchange known for its technology-heavy stock portfolio, being the second-largest in the world by market capitalization.

Electronic Communications Networks

are digital platforms that facilitate the trading of financial products outside traditional stock exchanges, connecting buyers and sellers directly.

Brokerages

Firms that act as intermediaries between buyers and sellers in financial transactions, often involving stocks, bonds, or real estate.

Primary Market

The market segment at which a company's products or services are primarily aimed, often defined by demographics such as age, gender, or income.