Tobias owns a bowling alley which was completely destroyed this year by a tornado. The fair market value of the bowling alley was $230,000 before the tornado and its adjusted basis was $100,000. Tobias received $220,000 from his insurance company but he decided to not rebuild the alloy What is Tobias' recognized gain or

SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter7: Property Transactions: Basis, Gain And Loss, And Nontaxable Exchanges
Section: Chapter Questions
Problem 5BCRQ
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Please Explain Proper And Show All Step Do Not Give Solution In Image Format And Thanks In Advance 

Tobias owns a bowling alley which was completely
destroyed this year by a tornado. The fair market value of
the bowling alley was $230,000 before the tornado and
its adjusted basis was $100,000. Tobias received
$220,000 from his insurance company but he decided to
not rebuild the alley. What is Tobias' recognized gain or
loss from this transaction?
Group of answer choices
$0
Loss of $230,000
Gain of $120,000
Gain of $220,000
Transcribed Image Text:Tobias owns a bowling alley which was completely destroyed this year by a tornado. The fair market value of the bowling alley was $230,000 before the tornado and its adjusted basis was $100,000. Tobias received $220,000 from his insurance company but he decided to not rebuild the alley. What is Tobias' recognized gain or loss from this transaction? Group of answer choices $0 Loss of $230,000 Gain of $120,000 Gain of $220,000
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