Joan Smart’s personal residence is condemned as part of the urbanization enlightened project. Her adjusted basis of the residence is $490,000. She receives condemnation proceeds of $470,000 and invests the proceeds in stocks and bonds.
(a): Calculate Joan’s realized and recognized gain or loss.
(b): If the condemnation proceeds are $515,000, what is Joan’s realized and recognized gain or loss?
(c): What is Joan’s realized and recognized gain or loss in (a) above if the house was a rental property?