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Teresa's manufacturing plant is destroyed by fire. The plant has an adjusted basis of $270,600, and Teresa receives insurance proceeds of $405,900 for the loss.

Teresa's manufacturing plant is destroyed by fire. The plant has an adjusted basis of $270,600, and Teresa receives insurance proceeds of $405,900 for the loss. Teresa reinvests $426,195 in a replacement plant within 2 years of receiving the insurance proceeds.

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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