Richard's Business Is Condemned by the State on July 10

question 25

Essay

Richard's business is condemned by the state on July 10, 2015, as part of a plan to add a highway loop around the city. His adjusted basis in his business is $500,000. He receives condemnation proceeds of $610,000 on August 30, 2015. He purchases another business for $575,000 on September 15, 2015.
a. What is Richard's realized and recognized gain or loss?
b. What is Richard's basis in the new business?

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Definitions:

Positron Emission Tomography

A nuclear medicine functional imaging technique that produces a three-dimensional image of functional processes in the body.

Cingulectomy

A neurosurgical procedure that involves removing or disconnecting parts of the cingulate gyrus to treat certain psychiatric disorders.

Psychosurgery

Surgical procedures on the brain intended to relieve or control severe or violent psychological disorders.

Hemispheres

Half of the spherical brain, divided into the right and left hemispheres, each controlling specific functions and activities.