Real property where Paul Peterson's warehouse is located is completely destroyed by ﬁre on November 23, 2012. Paul purchased the warehouse in 2006 for $800,000; its adjusted basis in the warehouse is $420,000. He receives $1 million from the insurance company on March 5, 2013. What amount must Paul reinvest in qualiﬁed replacement property and be able to defer the entire $580,000 realized gain from the condemnation?
A) $420,000.
B) $520,000.
C) $800,000.
D) $1,000,000.

Question

Quizplus · Accepted Answer

the realized gain is $580,000 but in order to defer the entire gain, Paul would have to invest an amount equal to or greater than the proceeds of $1,000,000.

Real Property Where Paul Peterson's Warehouse Is Located Is Completely