Stephanie's building,which was used in her business,was destroyed in a fire.Stephanie's adjusted basis in the building was $175,000,and its FMV was $210,000.Stephanie filed an insurance claim and was reimbursed $200,000.In that same year,Stephanie invested $180,000 of the insurance proceeds in another business building.If the proper election is made to defer gain,Stephanie will recognize gain of
A)$0.
B)$15,000.
C)$20,000.
D)$25,000.

Question

Quizplus · Accepted Answer

Stephanie's recognized gain is the insurance reimbursement minus the adjusted basis, which is $200,000 - $175,000 = $25,000. However, she reinvested $180,000, so the deferred gain is $200,000 - $180,000 = $20,000. Thus, she recognizes a gain of $20,000.

Stephanie's Building,which Was Used in Her Business,was Destroyed in a Fire.Stephanie's