Jerry owns a building in New Orleans. Jerry has a basis in the building of $100,000 and it has a fair market value of $650,000. Unfortunately, a fire destroyed the building. Jerry recovered $550,000 from his insurance company on March 3, 2018. Jerry brought a new building on May 13, 2018 for $500,000.

a) If Jerry makes the proper elections, will he have to recognize any income from these transactions for federal income tax purposes? If so how much?

b) What is Jerry's basis in the new building?