basia Taxpayer\'s office building with an adjusted ba of $550,000 and a fair mar

Question

basia Taxpayer's office building with an adjusted ba of $550,000 and a fair market value of $975,000 is condemned on December 31, 2017. He receives a condemnation award of s950, 000 on March 1, 2018. Taxpayer builds a ne office building at a cost of $930,000 which is completed and paid for on December 30, 2018. What is taxpayer's recognized gain on receipt of the condemnation award and basis for the new office building? a $20,000; $550,000 b $0; $530, 000. c s0: $930,000 d $400,000; $930,000. e Some other amounts

Explanation / Answer

Answer is D.

The adjusted book value is $550,000, where as the value of condemnation received $950,000; this will result in $400,000 as recognised gain.

As the new building is built at a cost of $930,000, the basis shall also be $930,000

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