The Smiths owned and occupied their principal residence, with an adjusted basis of $250,000, for ten years. The destroyed by a tornado and the Smiths receive insurance proceeds of $800,000. Six months later, they purchase a residence for $850,000.
a. What is the amount of gain the Smiths must recognize?
b. What is the basis of the new residence?

Question

Quizplus · Accepted Answer

The Answer of The Smiths owned and occupied their principal residence, with an adjusted basis of $250,000, for ten years. The destroyed by a tornado and the Smiths receive insurance proceeds of $800,000. Six months later, they purchase a residence for $850,000.
a. What is the amount of gain the Smiths must recognize?
b. What is the basis of the new residence?

The Smiths Owned and Occupied Their Principal Residence, with an Adjusted