An Office Building Owned by Abby and Used in Her

question 79

Essay

An office building owned by Abby and used in her business was destroyed in a fire.Abby's adjusted basis in the building was $145,000 and its FMV was $180,000.Abby filed an insurance claim and she was reimbursed $160,000.In that same year,Abby invested $150,000 of the insurance proceeds in another business building.
a.Assume Abby made the proper election with regard to the involuntary conversion.What is the amount of gain to be recognized by Abby?
b.What is Abby's basis in the new building?

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Definitions:

Demographic Changes

Alterations in the composition of a population over time, including factors such as age, race, employment, urbanization, and birth and death rates.

Rapid

Describes something happening in a fast or speedy manner, often quicker than expected.

American Society

The social structure and cultural norms prevalent in the United States.

Early Twenty-First Century

pertains to the period from the year 2000 onwards, characterized by significant technological advancements, globalization, and various social and political changes.