Sarah's commercial warehouse, used in her retail business, was severely damaged by a tornado. Sarah's adjusted basis in the warehouse was $180,000, and its fair market value (FMV) was $275,000. After filing an insurance claim, she received $250,000 in insurance proceeds. Within the same tax year, Sarah reinvested $200,000 of the insurance proceeds to purchase a new warehouse for her business. What amount of gain will Sarah recognize? a. $70,000 b. $50,000 c. $95,000 d. $0
Sarah's commercial warehouse, used in her retail business, was severely damaged by a tornado. Sarah's adjusted basis in the warehouse was $180,000, and its fair market value (FMV) was $275,000. After filing an insurance claim, she received $250,000 in insurance proceeds. Within the same tax year, Sarah reinvested $200,000 of the insurance proceeds to purchase a new warehouse for her business. What amount of gain will Sarah recognize? a. $70,000 b. $50,000 c. $95,000 d. $0
Chapter7: Losses—deductions And Limitations
Section: Chapter Questions
Problem 67P
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Transcribed Image Text:Sarah's commercial warehouse, used in her retail business, was severely
damaged by a tornado. Sarah's adjusted basis in the warehouse was
$180,000, and its fair market value (FMV) was $275,000. After filing an
insurance claim, she received $250,000 in insurance proceeds. Within
the same tax year, Sarah reinvested $200,000 of the insurance proceeds
to purchase a new warehouse for her business. What amount of gain will
Sarah recognize?
a. $70,000
b. $50,000
c. $95,000
d. $0
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