Income tax

28.

Please provide an explanation

A warehouse was damaged in a storm. The

warehouse was worth $225,000 before the casualty

and $65,000 after the casualty. The taxpayer's

adjusted basis in the warehouse was $77,000. The

insurance company reimbursed the taxpayer

$150,000 for its loss. To avoid paying tax on the

realized gain, how much must the taxpayer reinvest

and in what type of property?

----

1) $77,000 in another warehouse

2) $150,000 in any other business or

investment realty

3) $77,000 in any other business or

investment realty

4) $160,00 in another warehouse

5) None of the above.