Question

Stephanie's building, which was used in her business, was destroyed in a fire. Stephanie's adjusted basis in the building was $175,000, and its FMV was $210,000. Stephanie filed an insurance claim and was reimbursed $200,000. In that same year, Stephanie invested $180,000 of the insurance proceeds in another business building. Assuming the proper election is made to defer gain, Stephanie's basis in the new building will be

Group of answer choices

$180,000

$175,000

$210,000

$200,000

Answer 1

Given anformation according stephanie's adjuted base the building was -$1,75000 and It's Fair market value - $210,000 eseimbwerment amount -$200,000 reinvestment of insurance poroceeds £180000 Explanation - $ 200,000 * memorasce proceeds Minus Adjunted baucot old? building og J ($175000) equals: gain realized $25000 msurance proceeds Minus: posoceeds reinverted $200,000 $ (180000) equals: proceede not reinvented $ 20000 * gain recognized : lesson d (1) Grain realized $25000 (2) proceeds not $20,000 re anvented gain reacognized - $20,000

$180,000 04 cost of New building - less defered gain (gain realized - gain recognizes) [ 25000 – 200007 Baud of replacement building $ 175000 stepheniei barid on new building will be $175,000