Kristi Had a Business Building Destroyed in an Earthquake

question 99

Essay

Kristi had a business building destroyed in an earthquake. The old building was purchased for $250,000, and $80,000 of depreciation deductions had been taken. Her insurance proceeds were $550,000. Although the replacement property was much larger and nicer than her old building, Kristi's new property qualified as replacement property. She acquired the new property 13 months after the earthquake for $620,000. What is the amount of Kristi's realized gain and recognized gain and the basis in her new property?

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Definitions:

Carbon Dioxide

A colorless, odorless gas produced by burning carbon and organic compounds and by respiration, absorbed by plants in photosynthesis.

Carbonic Acid

A weak acid formed in solution when carbon dioxide reacts with water (H2CO3).

Blood PH

Blood pH is a measure of the acidity or alkalinity of blood, with a normal range for human blood typically being between 7.35 and 7.45, indicating a slightly alkaline condition.

Carbon Dioxide

A gas without color or smell, created from burning carbon and organic compounds, and emitted during breathing, which is taken in by plants during the process of photosynthesis.