Johnny owned a gas station with an adjusted basis of $300,000.After it was destroyed in a fire,he received $600,000 from the insurance company.Within the next year,he bought a new gas station for $480,000.What is Johnny's taxable gain and what is the basis in the new building?

Question

Quizplus · Accepted Answer

Johnny's taxable gain is $120,000 ($600,000 - $300,000 - $480,000). His basis in the new building is $300,000 ($480,000 - $120,000).

Johnny Owned a Gas Station with an Adjusted Basis of $300,000.After