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:

Same Industry

Refers to businesses and organizations that produce or provide similar goods and services.

Geographic Region

A specific area or section of space characterized by a particular set of features, whether natural, man-made, or social.

Dumping

Selling a product abroad for less than charged in the home market or for less than the cost of production

Research and Development Funding

Financial resources allocated for investigative activities with the intention of making discoveries that can help develop new products or services, or to improve existing ones.