Debbie’s warehouse (adjusted basis of $450,000) is destroyed by a hurricane in October 2019. Debbie, a calendar year taxpayer, receives insurance proceeds of $525,000 in January 2020 and elects §1033 for involuntary conversions. Calculate Debbie’s 1. realized gain or loss, 2. recognized gain or loss, and 3. basis for the replacement property if she: A. Acquires a new warehouse for $550,000 in January 2020, or B. Acquires a new warehouse for $500,000 in January 2020.
Debbie’s warehouse (adjusted basis of $450,000) is destroyed by a hurricane in October 2019. Debbie, a calendar year taxpayer, receives insurance proceeds of $525,000 in January 2020 and elects §1033 for involuntary conversions. Calculate Debbie’s 1. realized gain or loss, 2. recognized gain or loss, and 3. basis for the replacement property if she: A. Acquires a new warehouse for $550,000 in January 2020, or B. Acquires a new warehouse for $500,000 in January 2020.
Chapter13: Property Transact Ions: Determination Of Gain Or Loss, Basis Considerations, And Nontaxable Exchanges
Section: Chapter Questions
Problem 40CE
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Debbie’s warehouse (adjusted basis of $450,000) is destroyed by a hurricane in October 2019. Debbie, a calendar year taxpayer, receives insurance proceeds of $525,000 in January 2020 and elects §1033 for involuntary conversions. Calculate Debbie’s 1. realized gain or loss, 2. recognized gain or loss, and 3. basis for the replacement property if she:
A. Acquires a new warehouse for $550,000 in January 2020, or
B. Acquires a new warehouse for $500,000 in January 2020.
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