Leonard Lambert's commercial building, which had an adjusted basis of $500,000, was partially destroyed by ﬁre. fte fair market value was $800,000 just before the ﬁre and $600,000 immediately after. Leonard received $150,000 insurance proceeds and deducted a $50,000 casualty loss. What is Leonard's basis in the building before any repairs are made?

Question

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the $50,000 unreimbursed loss is a reduction in basis and the $150,000 receipt of insurance proceeds is also a reduction in basis. Leonard's basis in the building before repairs is $300,000 ($500,000 - $50,000 - $150,000).

Leonard Lambert's Commercial Building, Which Had an Adjusted Basis of $500,000