$100,000 Historical cost of office building $40,000 depreciation taken on office building $250,000 fair market value before tornado $0 fair market value after the tornado The building was insured for 80% of the fair Market value of the building Insurance proceeds were received on 7/15/2020 What is the realized gain and when do the proceeds have to be reinvested to avoid gain recognition under IRC §1033?
A tornado destroys your office building on 6/1/2019. Here are the facts
$100,000 Historical cost of office building
$40,000
$250,000 fair market value before tornado
$0 fair market value after the tornado
The building was insured for 80% of the fair Market value of the building
Insurance proceeds were received on 7/15/2020
What is the realized gain and when do the proceeds have to be reinvested to avoid gain recognition under IRC §1033?
A. $100,000 realized gain
Insurance proceeds must be reinvested in like kind property by 12/31/2021
B. $190,000 realized gain
Insurance proceeds must be reinvested in like kind property by 12/31/2021
C. $100,000 realized gain
Insurance proceeds must be reinvested in like kind property by 12/31/2022
D. None of the above
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