Calvin Corporation's office was burglarized. The thieves stole 10 laptop computers and other electronic equipment. The lost assets had an original cost of $35,000 and accumulated tax depreciation of $19,400. Calvin received an insurance reimbursement of $20,000 related to the theft loss and immediately purchased new replacement computer equipment. In each of the following cases: a. Determine Calvin's recognized gain, if any, and the tax basis of the replacement property. Assume that Calvin would elect to defer gain recognition when possible. The replacement property cost $27,000. b. Determine Calvin's recognized gain, if any, and the tax basis of the replacement property. Assume that Calvin would elect to defer gain recognition when possible. The replacement property cost $18,000.
Calvin Corporation's office was burglarized. The thieves stole 10 laptop computers and other electronic equipment. The lost assets had an original cost of $35,000 and accumulated tax depreciation of $19,400. Calvin received an insurance reimbursement of $20,000 related to the theft loss and immediately purchased new replacement computer equipment. In each of the following cases: a. Determine Calvin's recognized gain, if any, and the tax basis of the replacement property. Assume that Calvin would elect to defer gain recognition when possible. The replacement property cost $27,000. b. Determine Calvin's recognized gain, if any, and the tax basis of the replacement property. Assume that Calvin would elect to defer gain recognition when possible. The replacement property cost $18,000.
Chapter7: Losses—deductions And Limitations
Section: Chapter Questions
Problem 49P
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Transcribed Image Text:Calvin Corporation's office was burglarized. The thieves stole 10 laptop computers and other electronic equipment. The lost assets had
an original cost of $35,000 and accumulated tax depreciation of $19,400. Calvin received an insurance reimbursement of $20,000
related to the theft loss and immediately purchased new replacement computer equipment. In each of the following cases:
a. Determine Calvin's recognized gain, if any, and the tax basis of the replacement property. Assume that Calvin would elect to defer
gain recognition when possible. The replacement property cost $27,000.
b. Determine Calvin's recognized gain, if any, and the tax basis of the replacement property. Assume that Calvin would elect to defer
gain recognition when possible. The replacement property cost $18,000.
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