Question

Heidi's adjusted basis in business-use residential property was $70000. She received a gross condemnation award of $75000. Her net $73500. She purchased replacement property at a cost of $74000. What is her basis in replacement property?
A. $70000
B. $70500
C. $73500
D. $75000

Answer 1

Answer is option B -$70,500/-

Old residential property was $70,000 and received a gross condemnation award of$75,000 and net of $73,500. For the calculation purpose we have to consider net condemnation because net condemnation is getting by deducting the expenses from the gross condemnation. For this the gain would be $73,500-$70,000=$3,500.

And she purchased replacement property at a cost of$74,000.

So the basis in her replacement property is $74,000-$3,500= $70,500/-

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