Discussion Question 1-49 (Algorithmic) (LO. 7)

Mia owns a warehouse that has a cost basis of $161,200. The city condemns the warehouse to make room for a new fire station. It pays Mia $806,000 for the property, its agreed-to fair market value. Shortly after the condemnation, Mia purchases another warehouse as a replacement.

If amount is zero, enter "0".

a. What is her recognized gain if the new property cost is $564,200? $fill in the blank

b. What is her recognized gain if the new property cost is $886,600? $fill in the blank

c. What is her recognized gain if the new property cost is $161,200? $fill in the blank

d. What, if any, is the justification for deferring the recognition of gain on the involuntary conversion?

The involuntary conversion provision is justified under the and the notion that the taxpayer's economic position changed.