Fundamentals of Taxation 2011 4th Edition by Ana Cruz, Debra Prendergast, Dan Schisler, Michael Deschamps

Exercise 52

A warehouse with an adjusted basis of $125,000 was destroyed by a tornado on April 15, 2010. On June 15, 2010, the insurance company paid the owner $195,000. The owner reinvested $170,000 in another warehouse. What is the basis of the new warehouse if nonrecognition of gain from an involuntary conversion is elected? a. $100,000.
B) $125,000.
C) $170,000.
D) $195,000.