Dewayne\'s investment property was condemned. He purchased the property for $210
ID: 2334835 • Letter: D
Question
Dewayne's investment property was condemned. He purchased the property for $210,000; received a net condemnation award of $250,000; and purchased replacement property for $280,000. What is the amount of gain recognized after the replacement property is purchased? $0 $40,000 $210,000 $250,000 Dewayne's investment property was condemned. He purchased the property for $210,000; received a net condemnation award of $250,000; and purchased replacement property for $280,000. What is the amount of gain recognized after the replacement property is purchased?Explanation / Answer
Gain = $250,000 - $210,000 = $40,000
The gain from an involuntary conversion of tax payer's property may be deferred if the property is replaced within the statutory limit of 3 years for Government condemnation or eminent domain award. The time starts when the insurance/government proceeds are received.
As the property is replaced, no gain is recognized.
The answer is $0.
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