Theresa Owns a Yacht That Is Held for Personal Use

question 98

Essay

Theresa owns a yacht that is held for personal use and has a $100,000 basis.The yacht is destroyed by a storm and Theresa collects $120,000 from the insurance company.She purchases a new $150,000 yacht for personal use and elects to defer any gain on the transaction.What is the basis of the new yacht?

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Definitions:

Interest Rate

The cost of borrowing money or the return on invested funds, usually expressed as a percentage of the loan or investment.

Interest Rates

The cost of borrowing money or the return for investing money, typically expressed as an annual percentage of the principal.

Present Values

The present value of an anticipated amount of money or series of cash flows, using a designated rate of return.

Revenues

The total income generated by a company or entity from its business activities, such as sales of goods or services.