Dandy Corporation’s business building was destroyed by an earthquake this year and was located in a federally declared disaster area. Dandy had an adjusted basis in the building of $350,000. The fair market value of the building before the earthquake was $500,000. However, the building was insured for only $250,000 which was the amount received by Dandy’s insurance company. Dandy uses these funds and other resources to purchase a new business building for $400,000 by the end of the year. How much gain or loss must be recognized by Dandy? Group of answer choices $ 0 $50,000 gain. $100,000 loss. $150,000 gain.

Dandy Corporation’s business building was destroyed by an earthquake this year and was located in a federally declared disaster area. Dandy had an adjusted basis in the building of $350,000. The fair market value of the building before the earthquake was $500,000. However, the building was insured for only $250,000 which was the amount received by Dandy’s insurance company. Dandy uses these funds and other resources to purchase a new business building for $400,000 by the end of the year. How much gain or loss must be recognized by Dandy? Group of answer choices $ 0 $50,000 gain. $100,000 loss. $150,000 gain.

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter15: Property Transactions: Nontaxable Exchanges

Section: Chapter Questions

Problem 3CPA: Chad owned an office building that was destroyed in a tornado. The area was declared a Federal...

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Chad owned an office building that was destroyed in a tornado. The area was declared a Federal disaster area. The adjusted basis of the building at the time was 890,000. After the deductible, Chad received an insurance check for 850,000. He used the 850,000 to purchase a new building that same year. How much is Chads recognized loss, and what is his basis in the new building?
Antonio's bank foreclosed on his retail building when he stopped making loan payments. The nonrecourse loan was secured by the building when he purchased it three years ago for $665,000. Antonio's Form 1099-A, Acquisition or Abandonment of Secured Property, indicated that the debt at the time of foreclosure was $625,000, and the fair market value (FMV) of the building was $680,000. If the building is sold for the FMV, how much of Antonio's personal assets can the bank attempt to collect to satisfy the judgment?
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