(Solution) Alvin owned a building located in Kansas that he rented to a local business. Last year a tornado hit the property and completely destroyed it.

Alvin owned a building located in Kansas that he rented to a local business. Last year a tornado hit the property and completely destroyed it. This year, Alvin received an insurance settlement of $450,000. Alvin had originally purchased the building for $350,000 and had claimed a total of $100,000 of depreciation deductions. Alvin built a new building at a cost of $400,000. What is Alvin’s realized gain (loss) on this transaction?

 

 

What is Alvin’s recognized gain (loss) on this transaction?

 

 

What is Alvin’s tax basis in his new building?

 

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Sep 21, 2023

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