Sam's Office Building with an Adjusted Basis of $750,000 and a Fair

question 112

Multiple Choice

Sam's office building with an adjusted basis of $750,000 and a fair market value of $900,000 is condemned on November 30,2015.Sam is a calendar year taxpayer.He receives a condemnation award of $875,000 on March 1,2016.He builds a new office building at a cost of $845,000 which is completed and paid for on December 31,2018.What is Sam's recognized gain on receipt of the condemnation award and basis for the new office building assuming his objective is to minimize gain recognition?

• A)$0;$720,000.
• B)$30,000;$750,000.
• C)$30,000;$845,000.
• D)$150,000;$750,000.
• E)None of the above.

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Definitions:

Aging the Receivables

The process of categorizing accounts receivable according to the length of time an invoice has been outstanding.

Due Date

The specified date by which a payment, assignment, or task is required to be completed or submitted.

Age Groupings

Classification of data or people into groups based on their age.

Interest Revenue

Income earned from lending funds or investing in interest-bearing financial instruments.