Sam's Office Building with an Adjusted Basis of $625,000 and a Fair

question 52

Multiple Choice

Sam's office building with an adjusted basis of $625,000 and a fair market value of $885,000 is condemned on December 30,2010.Sam is a calendar year taxpayer.He receives a condemnation award of $850,000 on March 1,2011.He builds a new office building at a cost of $830,000 which is completed and paid for on December 31,2013.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;$605,000.
• B)$20,000;$830,000.
• C)$20,000;$625,000.
• D)$225,000;$830,000.
• E)None of the above.

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Definitions:

Principal Office

The main location or headquarters of a corporation where official business is conducted; often listed in legal documents.

State of Incorporation

The specific state in the United States where a corporation is registered to conduct business under its laws.

Corporation Laws

Laws that govern the formation, organization, and regulation of corporations.

Delaware

A state located on the eastern coast of the United States, known for its business-friendly laws and as a popular location for incorporating companies.