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

Exercise 56

A warehouse with an adjusted basis of $250,000 was destroyed by a tornado on April 15, 2010. On June 15, 2010, the insurance company paid the owner $395,000. The owner reinvested $470,000 in a new warehouse. What is the basis of the new warehouse if nonrecognition of gain from an involuntary conversion is elected? a. $105,000.
B) $250,000.
C) $325,000.
D) $395,000.