For Each of the Following Involuntary Conversions, Determine If the Property

question 216

Essay

For each of the following involuntary conversions, determine if the property qualifies as replacement property.
a. Chuck's restaurant building is destroyed by fire. He clears the site and builds another restaurant building.
b. Diane's warehouse which she used for storing inventory is destroyed by a tornado. She purchases another warehouse in which she will store inventory.
c. Part of Andrew's dairy farm land is condemned to make way for an interstate highway. He uses the condemnation proceeds to construct a barn to be used for storing cattle feed.
d. Liz owns a shopping mall which is destroyed by a flood. Since the tenant occupancy rate was down, she uses the insurance proceeds to purchase an office building which she will rent to tenants.
e. Eleanor's Maserati Gran Turismo is stolen. The original cost was $125,000, and she had used it exclusively for personal use. Due to the limited supply of this model, it had appreciated in value. Eleanor received insurance proceeds of $130,000 and uses the proceeds to purchase a replacement Gran Turismo.

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Definitions:

Spleen Removal

A surgical procedure, also known as splenectomy, performed to remove the spleen due to conditions such as trauma, disease, or blood disorders.

Abscess

A collection of pus (white blood cells, bacteria, and dead skin cells) that forms as a result of infection.

Liver Functions

Involved in detoxification, protein synthesis, and production of biochemicals necessary for digestion.

Natural Killer Cells

A type of lymphocyte (white blood cell) that plays a crucial role in the body's innate immune response by targeting tumor cells and virus-infected cells.