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:

Argument

An exchange of diverging or opposite views, typically a heated or angry one, or a reason or set of reasons given with the aim of persuading others that an action or idea is right or wrong.

Valid

Describes an argument or inference such that the truth of the premises entails or implies that conclusion must be true; in other words, it is impossible for the conclusion to be false if all of the premises are true.

Truth Table

A mathematical table used in logic, specifically in Boolean algebra, to compute the truth values of logical expressions based on their operators.

Negation

A grammatically correct construction used to assert that a statement is false.