Homer Corporation's office building was destroyed by fire.Homer collected insurance of $250,000,which equaled the building's basis,and $150,000 for profits lost during the time the company was rebuilding the office building.What is the amount taxable this year?

Question

Quizplus · Accepted Answer

The insurance proceeds received for profits lost during the time the company was rebuilding the office building are considered taxable income. Therefore, the amount taxable this year is $150,000. The insurance proceeds received for the building's basis do not count as taxable income because they only cover the cost of the asset that was destroyed.

Homer Corporation's Office Building Was Destroyed by Fire