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

question 10

Multiple Choice

A barn with an adjusted basis of $125,000 was destroyed by a tornado on March 5, 2015. On May 15, 2015, 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) $0.
• B) $120,000.
• C) $145,000.
• D)$170,000.

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