A Barn with an Adjusted Basis of $125,000 Was Destroyed

question 34

Multiple Choice

A barn with an adjusted basis of $125,000 was destroyed by a tornado on March 5,2016.On May 15,2016,the insurance company paid the owner $150,000.The owner reinvested $170,000 in another barn.What is the basis of the new barn if non-recognition of gain from an involuntary conversion is elected?

• A)$120,000.
• B)$145,000.
• C)$0.
• D)$170,000.

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