Problem 7-39 (LO. 6) Mitchell, a calendar year taxpayer, is the sole proprietor of a fast-food restaurant. His adjusted basis for the building and the related land is $450,000. On March 12 of the current year, state authorities notify Mitchell that his property is going to be condemned so that the highway can be widened. On June 20, Mitchell's property is officially condemned, and he receives an award of $625,000. Because Mitchell's business was successful in the past, he would like to reopen the restaurant in a new location a. What is the earliest date Mitchell can acquire new restaurant and qualify for 1033 postponement? March 12, 2019 Feedback Check My Work An involuntary conversion results from the destruction (complete or partial), theft, seizure, requisition or condemnation, or sale or exchange under threat or imminence of requisition or condemnation of the taxpayer's property. b. On June 30, Mitchell purchases land and a building for $610,000. Assuming that he elects the maximum postponement amount, what is his recognized gain? Mitchell's recognized gain is $ 15,000 Feedback Check My Work Correct c. What is Mitchell's adjusted basis for the new land and building? Mitchell's adjusted basis for the new land and building is $ 450,000 Feedback Check My Work Correct d. If he does not elect 1033, what are Mitchell's recognized gain and adjusted basis? If Mitchell does not elect 1033, his recognized gain , and his basis for the new land and building is is $ 175,000 0 X Feedback Check My Work Partially correct e. Suppose he invests the $625,000 condemnation proceeds in the stock market on June 30. What is Mitchell's recognized gain? Mitchell's recognized gain is $ 175,000 . Feedback