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

question 193

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, 2018. Sam is a calendar year taxpayer. He receives a condemnation award of $875,000 on March 1, 2019. He builds a new office building at a cost of $845,000 which is completed and paid for on December 31, 2021. 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 the above.

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Definitions:

Dualistic

Pertaining to or involving a distinction between two fundamentally different concepts, perspectives, or entities.

Relativistic

Pertaining to the understanding that knowledge, truth, and morality exist in relation to culture, society, or historical context and are not absolute.

Pragmatic

Concerned with practical considerations or consequences in decision-making or communication, focusing on effective and sensible approaches.

Relativistic

Pertaining to the view that concepts such as moral values and truth are not absolute but are relative to the perspectives or cultures from which they originate.