On January 10, 2014, a fire destroyed a warehouse owned by NP Company. NP’s adjusted basis in the warehouse was $530,000. On March 12, 2014, NP received a $650,000 reimbursement from its insurance company. In each of the following cases, determine NP’s recognized gain on this property disposition. Assume that NP would elect to defer gain recognition when possible.
a. NP’s board of directors decided not to replace the warehouse.
b. On January 2, 2016, NP paid $700,000 to acquire a warehouse to store its inventory.
c. On February 8, 2017, NP paid $700,000 to acquire a warehouse to store its inventory.