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?

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Definitions:

Overregularizations

A language development error where children apply standard grammatical rules too widely, often leading to incorrect verb forms or plural nouns.

Linguistic Relativity

The hypothesis that the structure of a language affects its speakers' worldview or cognition.

Cognitive Style

An individual's preferred method for processing information, thinking, and making decisions.

Linguistic Relativity

The hypothesis that one's language influences and reflects the way one thinks and perceives the world.