Oscarâs rental home (AB of home, excluding land = $100,000 ; FMV of home, excluding land = $500,000 ) was completely destroyed in a fire . Oscar had the home insured for its FMV. As a result, Oscar received insurance proceeds of $500,000. Oscar then used $ 450 ,000 of the proceeds to build a replacement property . Oscar used the other $50,000 of proceeds to pay off his student loans.
23. What is Oscarâs recognized gain or loss if Oscar elects nonrecognition where possible?
Note: you should calculate realized gain/loss first, but the question asks only for recognized gain/loss.
Note: understand how Oscar could avoid recognizing any gain on receipt of the insurance proceeds
24.What is Oscarâs basis in the replacement property if Oscar elects nonrecognition where possible?
Oscarâs rental home (AB of home, excluding land = $100,000 ; FMV of home, excluding land = $500,000 ) was completely destroyed in a fire . Oscar had the home insured for its FMV. As a result, Oscar received insurance proceeds of $500,000. Oscar then used $ 450 ,000 of the proceeds to build a replacement property . Oscar used the other $50,000 of proceeds to pay off his student loans.
23. What is Oscarâs recognized gain or loss if Oscar elects nonrecognition where possible?
Note: you should calculate realized gain/loss first, but the question asks only for recognized gain/loss.
Note: understand how Oscar could avoid recognizing any gain on receipt of the insurance proceeds
24.What is Oscarâs basis in the replacement property if Oscar elects nonrecognition where possible?
