Sam's Office Building with an Adjusted Basis of $750,000 and a Fair

question 94

Multiple Choice

Sam's office building with an adjusted basis of $750,000 and a fair market value of $900,000 is condemned on November 30, 2012.Sam is a calendar year taxpayer.He receives a condemnation award of $875,000 on March 1, 2013.He builds a new office building at a cost of $845,000 which is completed and paid for on December 31, 2015.What is Sam's recognized gain on receipt of the condemnation award and basis for the new office building assuming his objective is to minimize gain recognition?

• A)$0; $720,000.
• B)$30,000; $750,000.
• C)$30,000; $845,000.
• D)$150,000; $750,000.
• E)None of the above.

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Definitions:

\(- 4\)

A negative integer, four units less than zero.

\(3 ^ { n }\)

An exponential expression where 3 is the base and \(n\) is the exponent, indicating three raised to the power of \(n\).

\(n + 4\)

An algebraic expression indicating the sum of the variable 'n' and the number four.

\(- \frac { 3 } { n + 4 }\)

A fraction representing negative three divided by the sum of n and four, where n is any real number.