Question

Problem 13-83 (LO. 7) Mitchell, a calendar year taxpayer, is the sole proprietor of a fast-food restaurant. His adjusted basis for the building and the related land is $450,000. On March 12, 2019, state authorities notify Mitchell that his property is going to be condemned so that the highway can be widened. On June 20, Mitchell's property is officially condemned, and he receives an award of $625,000. Because Mitchell's business has been successful in the past, he would like to reopen the restaurant in a new location. a. What is the earliest date Mitchell can acquire a new restaurant and qualify for $ 1033 postponement? b. On June 30, Mitchell purchases land and a building for $610,000. Assuming that he elects the maximum postponement amount, what is his recognized gain? Mitchell's recognized gain is $ c. What is Mitchell's adjusted basis for the new land and building?

Answer 1

ego Answers @ The Earliest date mitchell con acquire a new restaurant El qualify for $1033 postponements The Earliest date to mitthel) can acquire a new restaurant and qualify for $1033 postponement is march 19,00 6. his reegiad going on June 30, mitchell perchases land & a building for $610,000, SO) - Recognized gain - condemnation proceeds - Adjusted basis. = 625,000-450,000 = $175,000 mitchelly recognized gain is limited to = 625,000-610,000 $15,000 simitchell't recognized Join = $15,000

And The postponed verlese = $175,000-15,000 --$160,000 @mitchell's adjusted basis for the rear land & buidabing : Adjusted basis for the new land & beilding a cost of land & building I postponed gain = 610,000-160,000 = $450,000 siedjusted basis for new land & beeilding Purchase by me. mitchell =$ 450000 a) möthell's Ycoprised gain &e adjusted basis of recognized gain = $625,000 - $450,000 = $175,000 . The realiacd & recopiard gain by not gelion for ection 81033 = $175.000 and The adjust basis for new land & bevilding - 4610,000 when, m. mitchell has not opted for the section $1033.

Mitchell recomand sain- pothu is purchased, and let the SICH hased under the section as no yeplacem $1033. : mitekehly recognized a rodiad gain = $ 175,000