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:

Learning

The process of acquiring new, or modifying existing, knowledge, behaviors, skills, values, or preferences.

Delegates

Representatives or agents chosen to act on behalf of others, typically in a political or organizational context, entrusted with decision-making responsibilities.

Authority

The power or right to give orders, make decisions, and enforce obedience.

Responsibility

An obligation to carry out duties or tasks with accountability for the outcomes.