QUESTION 40 1. On July 15, Year 1, Blanca's office building burned to the ground due to an electrical fire. The building's adjusted basis at the time of the fire was $100,000 but it was insured for $550,000, which Blanca received on August 1, Year 1. On December 1, Year 3, Blanca purchased a new office building at a cost of $500,000. Under the involuntary conversion rules of Code Section 1033, what is Blanca's tax basis in the new building? o $100,000 $150,000 C $450,000 $500,000 QUESTION 41 1. An individual purchased a taxable corporate bond at a premium. The bond has a remaining ten year maturity period. For federal income tax purposes, amortization of the premium Increases investment interest expense. is required C Reduces interest income, Increases interest income. Increases the basis of the bond. QUESTION 42 1 Donna purchased investment land on January 1, Year 3, for $150,000. On January 1, Year 5, she sold the land for $40,000 cash down-payment plus the buyer signed a note for $300,000 to be paid evenly over the next 3 years, beginning January 1, Year 6. The buyer assumed Donna's $70,000 mortgage on the land. Donna also paid selling expenses of $22,000. For purposes of the installment sales method, what is the gross profit percentage on the sale? 70% CCC 58% 615 799