Sidney, a Calendar Year Taxpayer, Owns a Building (Adjusted Basis

question 68

True/False

Sidney, a calendar year taxpayer, owns a building (adjusted basis $450,000) in Columbus, OH, in which he conducts his retail computer sales business. The building is destroyed by fire on December 12, 2018, and two weeks later he receives insurance proceeds of $600,000. Due to family ties, Sidney decides to move to Columbia, SC. He reinvests all of the insurance proceeds in a building in Columbia where he opens a retail computer sales business on April 2,2019. By electing § 1033, Sidney has no recognized gain and a basis in the new building of $450,000 ($600,000 cost -$150,000 postponed gain).

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Definitions:

Sliding Fit

A type of fit between two mechanical components that allows for smooth sliding movement, often used in parts where motion is required.

Maximum Clearance

The largest allowable gap in a fit between two mating parts, ensuring that even at the upper limit of tolerance, the parts will not interfere with each other.

Clearance Fit

A type of fit where there is always a space or clearance between the mating parts, ensuring no interference during assembly.

Shaft

A cylindrical object or component that transmits rotational force or motion from one part of a machine to another.