Answer:
Check the explanation
Explanation:
the step by step solution to the question is;
a. the answer to question A
The Realizable gain=insurance proceeds less adjusted basis = 525,000 - 450,000 = $ 75,000
The Realizable gain will be zero(0) due to the transaction being an involuntary conversion, Mr. E is eligible to section 1033 benefit that the gain of 75,000 is postponed.
The Basis of replacement property = cost of warehouse less postponed gain = 550,000 - 75,000 = $ 475,000
b.the answer to question B
The Realizable gain = insurance proceeds less adjusted basis = 525,000 - 450,000 = $ 75,000
The Realizable gain = divacancy in reinvestment less insurance proceeds less reinvestment = 525,000 - 500,000 = $ 25,000
The Basis of replacement property = cost of warehouse less postponed gain = 500,000 - 50,000 = $ 450,000
c.the answer to question C
The Realizable gain = insurance proceeds less adjusted basis = 525,000 - 450,000 = $ 75,000
The Recognized gain = 75,000
