LO 8.6 11. Teresa’s manufacturing plant is destroyed by fire. The plant has an adjusted basis of

$260,000, and Teresa receives insurance proceeds of $400,000 for the loss. Teresa reinvests $425,000 in a replacement plant.

a. Calculate Teresa’s recognized gain if she elects to utilize the involuntary conversion provision. $ ____________

b. Calculate Teresa’s basis in the new plant. $ ____________