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28 Sep 2019
Wanda, a calendar year taxpayer, owned a building (adjustedbasis of $250,000) in which she operated a bakery that wasdestroyed by fire in December 2018. She receives insurance proceedsof $290,000 for the building the following March. Wanda isconsidering two options regarding the investment of the insuranceproceeds. First, she could purchase a local building (suitable fora bakery) that is for sale for $275,000. Second, she could buy anew home for $290,000 and go back to college and finish herdegree.
a. To minimize her tax liability, which ofthese alternatives should Wanda choose?
Option 1 results in a recognized gain of $________ and Option 2results in a recognized gain $ ______ Therefore, Wanda shouldselect__________.
Fill in the blanks.
Wanda, a calendar year taxpayer, owned a building (adjustedbasis of $250,000) in which she operated a bakery that wasdestroyed by fire in December 2018. She receives insurance proceedsof $290,000 for the building the following March. Wanda isconsidering two options regarding the investment of the insuranceproceeds. First, she could purchase a local building (suitable fora bakery) that is for sale for $275,000. Second, she could buy anew home for $290,000 and go back to college and finish herdegree.
a. To minimize her tax liability, which ofthese alternatives should Wanda choose?
Option 1 results in a recognized gain of $________ and Option 2results in a recognized gain $ ______ Therefore, Wanda shouldselect__________.
Fill in the blanks.
Nestor RutherfordLv2
28 Sep 2019