On July 2,2019,a tornado destroyed an asset owned by Leigh Inc.,a calendar year taxpayer.Leigh's adjusted tax basis in the asset was $22,700,and the reimbursement from its property insurance company was $35,000.If Leigh wants to defer recognizing its $12,300 realized gain,it must replace the asset no later than December 31,2020.

Question

Quizplus · Accepted Answer

Leigh Inc. has two years from the end of the tax year in which the gain was realized to replace the asset, so the replacement deadline would be December 31, 2021, not 2020.

On July 2,2019,a Tornado Destroyed an Asset Owned by Leigh