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 $150,000 received for lost profits is taxable income. The $250,000 received for the building is not taxable as it equals the building's basis, meaning there is no gain.

Homer Corporation's Office Building Was Destroyed by Fire