Question

Sharon's basis in investment use land was $15000. She received a gross condemnation award of $20000. Her net condemnation award was $19500. She purchased replacement property at a cost of $25000. What is Sharon's basis in replacement property?
A. $15000
B. $19500
C. $20500
D. $25000

Answer 1

Answer is option-C $20,500.

Investment use land was $15,000 and she received a gross condemnation award of$20,000 and a net of $19,500. For the calculation we consider the net condemnation award because net condemnation is received by deducting the expenses from the gross condemnation. So $19,500-$15,000= $4,500.

She purchased replacement property at a cost of$25,000.

So, the Sharon's basis in replacement property is $25,000-$4,500=$20,500.

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