55. During the current year, the Harlow Corporation, which specializes in commercial construction, has the following property transactions. Determine the realized and recognized gain or loss on each of Harlows property transactions and the basis of any property acquired in each transaction: a. In April, a tornado damages a crane and a dump truck at one of its construc- tion sites. The crane was acquired in 2017 for $120,000 and has an adjusted basis of $39,650. The dump truck was acquired in 2015 for $70,000 and has an adjusted basis of $33,880. The insurance company reimburses Harlow $35,000 for the crane and $42,000 for the dump truck. The company decides not to replace the dump truck and uses the insurance proceeds to purchase a new crane for $110,000. b. A fire destroys the companys supply warehouse. The warehouse originally cost $300,000 and has an adjusted basis of $200,000. Its fair market value before the fire was $250,000. The insurance company pays Harlow $230,000, which it uses to acquire a warehouse costing $280,000. c. The city of PeaceDale condemns land that Harlow had acquired in 1985 for $22,000 and held as an investment. The city pays Harlow the $195,000 fair market value of the land. Harlow uses the proceeds to acquire a commercial office park for $350,000.

Chapter 12 Nonrecognition Transactions 12-29