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

question 112

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Sam's office building with an adjusted basis of $750,000 and a fair market value of $900,000 is condemned on November 30,2015.Sam is a calendar year taxpayer.He receives a condemnation award of $875,000 on March 1,2016.He builds a new office building at a cost of $845,000 which is completed and paid for on December 31,2018.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?


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