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Chapter 12 Homework Question 4
Chapter 12 Homework
4. On April 27, 2020, an office building owned by Ava James Corporation, an offshore drilling company that is a calendar-year taxpayer, is destroyed by a hurricane. The basis of the office building is $600,000, and the corporation receives $840,000 from the insurance company.
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a. |
To defer the entire gain due to the involuntary conversion, what amount must the corporation pay for replacement property? |
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b. |
To defer the gain due to the involuntary conversion, by what date must the corporation replace the converted property? |
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c. |
If Ava James replaces the office building by purchasing a 900,000 gallon storage tank for $810,000, may it defer any of the gain due to the involuntary conversion? |
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d. |
Will answers to Parts b and c change if the office building had been condemned by the state? Explain. |
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