The Smiths Owned and Used Their Principal Residence,with an Adjusted

question 7

Essay

The Smiths owned and used their principal residence,with an adjusted basis of $250,000,for ten years.The house is destroyed by a tornado and the Smiths receive insurance proceeds of $800,000.Six months later,they purchase another residence for $850,000.
a.What is the amount of gain the Smiths must recognize?
b.What is the basis of the new residence?

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Definitions:

Child Care

The care and supervision of young children, especially by a person other than the child's parents.

Security

Measures and protocols implemented to protect individuals, data, and assets from theft, attack, or other threats.

Attachment

The emotional bond that develops between a child and a caregiver, providing the child with emotional security.

Gestures

Movements of the body or limbs that express or emphasize an idea, sentiment, or attitude.