Luke's offshore drilling rig with a $700,000 adjusted basis is destroyed by a hurricane. He collects $620,000 from insurance company and purchases a new drilling rig for $600,000.
a. What are the tax consequences of these transactions?
b. What is the basis of the new rig?

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The Answer of Luke's offshore drilling rig with a $700,000 adjusted basis is destroyed by a hurricane. He collects $620,000 from insurance company and purchases a new drilling rig for $600,000.
a. What are the tax consequences of these transactions?
b. What is the basis of the new rig?

Luke's Offshore Drilling Rig with a $700,000 Adjusted Basis Is