Problem 8-21 (Algorithmic) Involuntary Conversions (LO 8.12)

Teresa's manufacturing plant is destroyed by fire. The plant has an adjusted basis of $293,000, and Teresa receives insurance proceeds of $439,500 for the loss. Teresa reinvests $461,475 in a replacement plant within 2 years of receiving the insurance proceeds.

If an amount is zero, enter "0".

a. Calculate Teresa's recognized gain if she elects to utilize the involuntary conversion provision. $

b. Calculate Teresa's basis in the new plant. $