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

question 6

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 30,2014.Sam is a calendar year taxpayer.He receives a condemnation award of $875,000 on March 1,2015.He builds a new office building at a cost of $845,000 which is completed and paid for on December 31,2017.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 these.

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Definitions:

Residual Standard Deviation

A statistical measure that quantifies the amount by which an investment's returns deviate from its expected benchmark performance.

Treynor Measure

A performance metric for determining how well an investment portfolio or fund has performed on a risk-adjusted basis, using beta as the risk measure.

Residual Standard Deviation

A measure of the amount of variability or dispersion of a set of data points around a regression line not explained by the regression itself.