Reid Had a Business Building Destroyed in a Fire

question 95

Essay

Reid had a business building destroyed in a fire. The old building was purchased for $375,000 and $60,000 of depreciation deductions had been taken. Although the old building had a fair market value of $425,000 at the time of the fire, his insurance proceeds were limited to $400,000. Reid found qualified replacement property which he acquired six months later for $390,000. What is the amount of Reid's realized gain and recognized gain?

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Definitions:

Stratigraphic Section

A vertical profile or cross-section through sedimentary rocks or soils showing the sequence and relationship of strata.

Relative Thicknesses

Refers to the comparison of thickness between different layers or sections within a geological or material context.

Rock Units

Distinct continuous layers or bodies of rock that can be identified and mapped across a region.

Land Surface

The physical and biological cover on the earth's crust, including soil, vegetation, and man-made structures.