A warehouse with an adjusted basis of $125,000 was destroyed by a tornado on April 15, 2017.
Question:
A warehouse with an adjusted basis of $125,000 was destroyed by a tornado on April 15, 2017. On June 15, 2017, the insurance company paid the owner $195,000. The owner reinvested $170,000 in another warehouse. What is the basis of the new warehouse if non-recognition of gain from an involuntary conversion is elected?
a. $100,000.
b. $125,000.
c. $170,000.
d. $195,000.
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