Answer:
a. The earliest date that Mitchell can acquire a new restaurant and qualify for § 1033 postponement is March 12
b. On June 30
Mitchell purchases land and a building for $610,000
Recognized gain = Condemnation proceed - Adjusted basis
= $625,000 - $450,000
= $175,000
Mitchell's recognized gain is limited to $625,000 - $610,000 = $15,000
Thus, Mitchell's recognized gain is $15,000
c. Adjusted basis for the new land and building = Cost of land and building - Postponed gain = $610,000 - $160,000 = $150,000. Thus, adjusted basis for the new land and building purchase by Mitchell is $450,000
d. Realized gain = $625,000 - $450,000 = $175,000. Thus, the unrealized gain by not option for section § loss = $175,000 and the adjusted basis for new land and building is $610,000
e. Under the section § 1033 , as no replacement property to purchased. Mitchell's recognized gain = $175,000
