Twin Corporation, a calendar year C Corporation, owned land it used in its business operations. The land had been purchased 7 years ago and had an adjusted basis of $800,000. The land was condemned by the State of Minnesota to expand a two-lane county highway to four lanes. On February 1, 2019, the State of Minnesota paid Twin Corporation $1,200,000 for the land. The condemnation was an involuntary conversion under IRC Section 1033. On November 1, 2019, Twin Corporation purchased a new parcel of land for $1,130,000 by using the condemnation proceeds. Under the circumstances, what is Twin Corporation Corporation’s recognized gain or loss on the involuntary conversion and its basis in the new land? Question 3 options: a) Recognized gain = $0. New Basis = $800,000. b) Recognized gain = $70,000. New Basis = $800,000. c) Recognized gain = $400,000. New Basis = $1,200,000. d) Recognized gain = $70,000. New Basis = $1,130,000. e) Recognized gain = $400,000. New Basis = $800,000.
Twin Corporation, a calendar year C Corporation, owned land it used in its business operations. The land had been purchased 7 years ago and had an adjusted basis of $800,000. The land was condemned by the State of Minnesota to expand a two-lane county highway to four lanes. On February 1, 2019, the State of Minnesota paid Twin Corporation $1,200,000 for the land. The condemnation was an involuntary conversion under IRC Section 1033. On November 1, 2019, Twin Corporation purchased a new parcel of land for $1,130,000 by using the condemnation proceeds. Under the circumstances, what is Twin Corporation Corporation’s recognized gain or loss on the involuntary conversion and its basis in the new land?
Question 3 options:
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