Sam’s store is destroyed in 2010 as a result of a flood. The store has an adjusted basis of $70,000, and Sam receives insurance proceeds of $150,000 on the loss.

Sam invests $135,000 in a replacement store in 2011.

1. Calculate Sam’s recognized gain, assuming an election under the involuntary conversion provision is made.

$ ____________ 2. Calculate Sam’s basis in the replacement store. $ ____________