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:

Cognitive-Social Learning

A theory that highlights the role of thought processes (cognition) in the social learning of behaviors, attitudes, and emotions.

Psychodynamic

pertains to a psychological approach that emphasizes the systematic study of the psychological forces that underlie human behavior, feelings, and emotions and how they might relate to early experience.

Behavioral

Relating to the study of observable actions or responses in individuals, often used in psychology to analyze and modify unwanted behaviors.

Locus of Control

A psychological concept that refers to how strongly people believe they have control over the situations and experiences that affect their lives.