Spring's office building is destroyed by fire on July 12, 2020. The adjusted basis is $315,000. He receives insurance proceeds of $350,000 on August 31, 2020. Spring purchases a new office building for $350,000 in 2020. Assume he elects and qualifies for the § 1033 (nonrecognition of gain from an involuntary conversion) postponement. a. Calculate the amount amount of realized and recognized gain/loss that Spring must report in his 2020 tax return. b. Rather than purchasing the $350,000 office building, calculate the amount that Spring must reinvest in a new office building if he wanted to recognize $20,000 of gain in his 2020 tax return. c. Calculate Spring's basis in the the new office building in b.
Spring's office building is destroyed by fire on July 12, 2020. The adjusted basis is $315,000. He receives insurance proceeds of $350,000 on August 31, 2020. Spring purchases a new office building for $350,000 in 2020. Assume he elects and qualifies for the § 1033 (nonrecognition of gain from an involuntary conversion) postponement.
a. Calculate the amount amount of realized and recognized gain/loss that Spring must report in his 2020 tax return.
b. Rather than purchasing the $350,000 office building, calculate the amount that Spring must reinvest in a new office building if he wanted to recognize $20,000 of gain in his 2020 tax return.
c. Calculate Spring's basis in the the new office building in b.
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