Kareem's Office Building Is Destroyed by Fire on April 11,2017

question 48

Essay

Kareem's office building is destroyed by fire on April 11,2017.Settlement is reached with the insurance company on November 1,2017 when he receives a check for $900,000.The property had recently been appraised for $920,000.Kareem's adjusted basis in the building was $800,000.
a.What is Kareem's realized gain or loss?
b.Assume Kareem wishes to defer the maximum amount of gain.Indicate:
(1)the minimum amount that must be spent on a new property.
(2)any restrictions on the new property in order for it to qualify.
(3)the deadline for placing the new property in service.
c.Assume that instead of a fire,the state forces Kareem to sell the property.Indicate how your responses to part b would differ.

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Definitions:

Perfectly Competitive

A market structure characterized by a large number of small firms, a homogeneous product, and free entry and exit, leading to price taking behavior.

Total Revenue

The total income received by a company or organization from its normal business activities, usually from the sale of goods and services to customers.

Figure 16-11

This appears to be a reference to a specific figure in a text or document and without further context, it can't be precisely defined.

Profit

The financial gain realized when the revenue from business activities exceeds expenses, costs, and taxes.