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?

---

Definitions:

Incompatibility

The state of being unable to exist or work in close association with another factor, element, or substance without conflict.

Neurotic Trends

Patterns of thinking, behaving, or feeling that are maladaptive and typically result from unresolved conflicts or anxieties.

Personality Conflict

A clash or disagreement between individuals due to differing temperaments, attitudes, or beliefs.

Helpless

Lacking the ability, strength, or power to help oneself or do anything about a situation.