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:

Iron Deficient

A condition characterized by a lack of adequate iron in the body, which can lead to anemia, affecting the body's ability to carry oxygen in the blood.

Vegan Diet

A dietary practice that excludes all animal products, including meat, dairy, and eggs, often for health, ethical, or environmental reasons.

Soybean Milk

A plant-based milk produced by soaking and grinding soybeans, then boiling the mixture and filtering out remaining particulates, often used as a dairy alternative.

Protein Deficient

A nutritional condition characterized by insufficient protein intake leading to health issues such as muscle wasting and weakened immunity.