The Joneses’ home that they had owned and lived in for 12 years was destroyed in a flood. Fortunately, they had flood insurance that paid replacement value of

$280,000 for their loss.The home had a basis of $223,000. How much gain must they recognize if they purchase a new home for only $268,000?

a. 0

b. $12,000

c. $45,000

d. $57,000.

AppendixLO1