Patty's Factory Building,which Has an Adjusted Basis of $325,000,is Destroyed

question 86

Essay

Patty's factory building,which has an adjusted basis of $325,000,is destroyed by fire on March 5,2011.Insurance proceeds of $475,000 are received on May 1,2011.She has a new factory building constructed for $450,000,which she occupies on October 1,2011.Assuming Patty's objective is to minimize the tax liability,calculate her recognized gain or loss and the basis of the new factory building.

---

Definitions:

Social Discounting Bias

The tendency to devalue benefits or resources when they are to be shared with an increasing number of others.

Hostile Attribution Bias

The inclination to perceive the actions of others as being motivated by aggression, even if those actions are unclear or harmless.

Obstructionism

Deliberate interference or actions aimed at delaying or preventing progress or the accomplishment of an objective.

Social Withdrawal

The behavior of avoiding social interactions and activities, often resulting from anxiety, depression, or personal preference, leading to reduced social involvement.