Dandy Corporations business building was destroyed by an earthquake this year and was located in a federally declared disaster area. Dandy had an adjusted basis in the building of $350,000. The fair market value of the building before the earthquake was $500,000. However, the building was insured for only $250,000 which was the amount received by Dandys insurance company. Dandy uses these funds and other resources to purchase a new business building for $400,000 by the end of the year. How much gain or loss must be recognized by Dandy?

Group of answer choices

$ 0

$50,000 gain.

$100,000 loss.

$150,000 gain.