On May 13, 2010, a Flood Destroyed the Building in Which

question 33

Essay

On May 13, 2010, a flood destroyed the building in which SDF Inc. manufactured its product. SDF's adjusted tax basis in the building was $984,000. On November 29, 2010, SDF received a $1.2 million reimbursement from its casualty insurance company. In each of the following cases, compute SDF's recognized gain on this involuntary conversion and its initial basis in the replacement property.
a. On June 2, 2011, SDF completed construction of a replacement building for $1.3 million.
b. On February 18, 2013, SDF paid $1.3 million to purchase a replacement building.
c. On August 30, 2012, SDF paid $1.1 million to purchase a replacement building.

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Definitions:

Ethylbutanal

A chemical compound with a distinctive smell, often used in flavoring and fragrance manufacturing.

Compound Name

The unique name given to a chemical substance, describing its composition and molecular structure.

Propanoic Acid

A naturally occurring organic compound with the formula C2H5COOH, used in the manufacture of various plastics and preservatives.

Line Structure

A simplified representation of a chemical structure using lines to denote chemical bonds and avoiding explicit representation of carbon and hydrogen atoms.