Question
Teresa's manufacturing plant is destroyed by fire. The plant has an adjusted basis of $260,000, and Teresa receives insurance proceeds of $400,000 for the loss.
Teresa's manufacturing plant is destroyed by fire. The plant has an adjusted basis of $260,000, and Teresa receives insurance proceeds of $400,000 for the loss. Teresa reinvests $425,000 in a replacement plant.
a. Calculate Teresa's recognized gain if she elects to utilize the involuntary conversion provision. $__________
b. Calculate Teresa's basis in the new plant. $__________
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