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Patty's Factory Building, Which Has an Adjusted Basis of $325,000

question 52

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Patty's factory building, which has an adjusted basis of $325,000, is destroyed by fire on March 5, 2012.Insurance proceeds of $475,000 are received on May 1, 2012.She has a new factory building constructed for $450,000, which she occupies on October 1, 2012.Assuming Patty's objective is to minimize the tax liability, calculate her recognized gain or loss and the basis of the new factory building.


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